Rural India turns top bet of stock market

3M Factor: Modi, migrants & monsoon raise hopes

Prime Minister Narendra Modi's incentives, a migrant worker exodus from cities and forecasts for a normal monsoon are increasing the appeal of staples stocks tied to rural India.

Analysts at IDFC Securities Ltd., Centrum Broking Ltd and Crisil Ltd are betting that shares of rural-focused consumer staples companies can outperform those serving cities as the nation begins to ease a nationwide lockdown. They are confident even as India heads for its first full-year economic contraction in more than four decades. The rural economy accounts for about 45 per cent of gross domestic product.

Their reasons for being bullish include the government's Rs 1.5 lakh crore ($20 billion) package to help farmers and fishermen, its steps to boost the income of farmers and the timely onset of critical rains. In addition, thousands of migrant workers are looking to work from their home towns.

The companies that "have a higher exposure to rural markets will definitely grow faster," said Shirish Pardeshi, analyst at Centrum Broking. The "migrant labourers who have returned to their villages will start working and earning there and the government is giving doles to farmers, this money will come back to

the staples added.

"Rural is a huge tailwind this year," said Rohit Dokania, an analyst at IDFC Securities. "The lockdown wasn't as severe in rural India as it was in big cities. So the farmers could harvest crops," he added.

For Dokania and Centrum's Pardeshi, shares in Hindustan Unilever Ltd, Dabur India Ltd and Britannia Industries Ltd stand to benefit the most from a rise in spending and income in rural India. The three stocks have outperformed

category,"

he

the Sensex and the BSE Fast Moving Consumer Goods Index this year.

Anuj Sethi, a director at Crisil Ltd is also more optimistic about India's villages than its towns. Rural India "will fare better than urban areas because of higher proportion of essential products consumed, government doles, eased restrictions on agricultural activities and likelihood of normal monsoon," he wrote in a note.

Rural spending only popular focus. Analysts isn't the strategy at IIFL

securities Ltd are rooting for underperformers to catch up with their stronger peers.

Sanjiv Bhasin, a strategist at IIFL Securities, favours ITC Ltd and Godrej Consumer Products Ltd, both of which have underperformed the BSE FMCG Index this year. He said that the two stocks can surge 40 per cent in next one year due to valuations and a change in their product mix.

"We're seeing a lot of value in these two underperformers," Bhasin said.

New Delhi, June 8: The government on Monday rolled out short messaging service (SMS) facility for taxpayers filing 'Nil' monthly GST returns, a move that will benefit about 22 lakh registered taxpayers.

"In a major move towards taxpayer facilitation, the government has today onwards allowed filing of Nil GST monthly return in Form GSTR-3B through SMS," the Central Board of Indirect Taxes and Customs (CBIC) said in a statement.

This would improve ease of GST compliance for over 22 lakh registered taxpayers who had to otherwise log into their account on the common portal and then file their returns every month. Nil return SMS can be sent to 14409 after 1st date of subsequent month.

Now, businesses with nil or no entry in all the tables in form GSTR-3B can file return through an SMS using the registered mobile number and the said return will be verified through one time password (OTP) facility.