With the 1st day of July, begins the wait for amazing weather, greener trees, pleasant breeze, and cheerful people; Monsoon. While some of the regions of our nation witness somewhat harsh monsoon conditions, for the rest of it, monsoon is a blessing. A lot of people wait for the monsoon to arrive as their livelihood depends on it, most importantly the Indian Farmer. Kharif crops, more commonly known as Paddy crops need a lot of water while growing and hence depend majorly on monsoon rains.
If the monsoon is above average, the crops are better cultivated and lead to better returns to the farmers. But is that the end of the story? Does monsoon have such a limited impact, only to the Indian farmer and his crops?
No, monsoon as reliving it brings a bag full of joy for Indian investor as well. Apart from the agriculture industry, there are many other sectors as well which benefit from the onset of monsoon.
Another important factor to consider is that with the increased domestic consumption, the economy of India will get a boost with a good monsoon. A majority of India’s population is employed in the agriculture sector hence improving the overall GDP.
Monsoon and Industry
Monsoon has an indirect impact on the related industries. While the agriculture sector faces a direct impact. Since agriculture is linked to other industries, the effect is hence transitioned.
Gaining sectors with monsoon
With the onset of monsoon, there are a few sectors which enjoy a rise in demand for their products and services. The first industry that enjoys the biggest rise is the FMCG industry. With the increased purchasing power of the rural economy, the companies which hold a great deal in rural penetration benefit the most like Dabur, Hindustan Unilever, Wipro FMCG, Godrej consumer products.
The next beneficiary is the packaged food industry which procures raw material from the agri-industry for its end products. Companies like Britannia, ITC, Nestle GSK consumer are amongst the few leaders.
Investors must consider investing in the shares of these companies and others in the same industry.
Another industry which benefits from the onset of monsoon is the automobile industry. Especially the demand for two-wheelers and cheap four-wheelers rises. There is also an upwardly trend seen in the demand for tractors during the monsoon.
The next industry which will enjoy some benefits is the fertilizer industry. Since the usage of natural gas as fertilizer is not so developed as yet, artificial fertilizers are the last resort of farmers to grow and save crops from any damage. The fertilizer and hence chemical industry are two more beneficiaries.
Investors who are looking forward to investing must consider these seasonal industries for a short-term investment or must opt for an STP mode for future transactions. Investing in the shares of these companies is expected to reap greater returns showering not just rains on investors but money as well.
It would be best if you go for a systematic transfer plan with your investment method so that once the monsoon is over and you feel the rains are not so heavenly, you can always transfer your funds to a better rewarding sector or the then seasonal sector.
The following are the 5 major industries at large which benefit while welcoming monsoon;
- FAST MOVING CONSUMER GOODS
- PACKAGED FOOD
Before you put your money in a general investment avenue do consider these industries and make the most of monsoon.