Monsoon's pace will have positive bias on Nifty

Mr. Rohit Gadia, Founder & CEO, CapitalVia Global Research Limited, has said that the monsoon's pace will have positive bias on Nifty if resistance level of 8500 is crossed, also the top five stocks for highly benefited by progress of monsoon.

"As per the previous forecasts made that because of el-Nino effect the monsoon in 2015 will not be quite effective but as the monsoon is progressing it's even more that the forecasts made, strengthening the prospect for good farm output, which could help bring relief to Indian economy as well as the sluggish equity market Monsoon rains from June to September are a key factor for global commodities markets as they influence output of various crops in India, which is among the world's leading producers and consumers of wheat, rice, sugar and edible oils. Ample monsoon rains lift domestic demand, as higher farm output increases the incomes of rural people, higher demand for goods and services can boost economic growth. Also, inflation could ease because a better supply of crops would lead to lower prices and take the pressure off the government to step in with fiscal measures and extra subsidies. A stronger economic outlook can lift sentiment in equity markets, particularly of firms that sell products in rural areas, including consumer goods and automobiles. Progress in monsoon has already started indications of bringing relief to equity markets as the Market has stabilized in past few sessions and a recovery seems to be in queue if the Monsoon continues the same pace. We expect that the trend will continue as technically too Nifty future has overcame its corrective phase and can move with positive biasness if resistance level of 8500 is crossed".

Top 5 stocks that will be highly benefited by progress of monsoon are Seed, fertilizer & power sector stocks.

M&M FINANCIAL SERVICES: A good monsoon is directly proportional to higher earnings for farmers; thereby the purchase of tractors and personal vehicles will be in demand. As a result, the company's loan growth may rise as higher demand for cars and utility vehicles will lead to an increase in loan demand.

NHPC: NHPC Ltd., incorporated in the year 1975 is a company operating in Power sector; a good Monsoon indicates higher water levels in reservoirs. This means more water is available for hydro-power projects, and thus helps generate more electricity increase in water availability thus monsoon can give a boost to this stock

KAVERI SEEDS: A leader in the Indian hybrid seeds industry, more than 70% of its revenue comes in the quarter ending June. A strong monsoon will not only boost up the sales for the quarter but also increase in production of its commercial seeds.

RALLIS INDIA: A strong monsoon and farm output leads to an increase in agrochemical consumption. The July-September quarter is typically the year's best for the company, a period in which it reports maximum of annual sales.

RASHTRIYA CHEMICALS & FERTILISERS: The leading fertilizer maker may witness a rise in sales as of a good monsoon. Profitability can also be increased.

Source : Equity Bulls

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