As hopes of an above normal monsoon gain ground, experts believe Indian economy may grow beyond 8 per cent in the fiscal year 2017 translating into a surge of growth for the India Inc as well.
"I expect the economy to start picking up from the 2nd quarter in the current financial year. This, of course, will depend on the monsoon and assuming the monsoon good, we should start seeing positive effect of the same in December and March quarter corporate results," said market expert Sudip Bandyopadhyay.
Though the latest surge in Consumer Price Index (CPI) inflation and Wholesale Price Index (WPI) inflation has dented hopes of a rate cut by Reserve Bank of India (RBI) in its June policy review, Jimeet Modi, CEO, SAMCO Securities said other boosters such as disbursal of 7th pay commission, higher disposable income in the hands of both urban and rural population on account of normal monsoon would lead to all round cascading effects in the economy making India singularly one of the fastest growing large economy of the world.
Bandyopadhyay also noted while the private investment has dried up, the government spending is increasing in a calibrated manner. In this backdrop, the expert suggested following sectors to look upon for medium term:
- Cement: Current focus of the government has been on housing, smart cities, housing for all by 2020, road construction etc. The common ingredient for all the above is Cement. We believe that the demand of Cement in the economy is going to go up over the next few years. In view of the above, Cement will remain a key sector and an area of growth.
- Building Materials: Since the focus of the government is on housing, smart cities and housing for all by 2020, sectors like plywood, paints, sanitary ware, ceramics etc. will be in demand over the next few years. It should be noted that these sectors have very few recognised and organized players. Major part of the industry is unorganized. Additional demand for the products and implementation of GST will bring disproportionately higher benefits to the players in the organized sectors.
- Construction: As a sector, construction will remain an area of key focus on account of the emphasis laid by the government on roads, railways, housing etc. We believe that efficient and well managed companies in this sector will benefit over the next few years.
- Housing Finance: Demand for housing and housing finance will continue and accelerate with the recovery of the economy. This sector will continue to attract positive attention of the market over the next few years. Projects like Smart Cities, Housing for all by 2020 etc. will undoubtedly give a further boost to this sector.
- FMCG: Good monsoon coupled with gradual recovery of the economy including rural sector will provide boost for both consumer durable and non durable sectors. During the last couple of years, the leading companies in this sector have become more and more efficient and incremental demand will ensure exponential benefit for these companies.