Women walk by bottles of Hindustan Unilever Ltd. Dove and Lux deodorant displayed at a store in Mumbai, India. (Photographer: Kuni Takahashi/Bloomberg)

Macquarie Joins Bulls on India Consumer Stocks as Demand Revives

Subscribe to Bloomberg | Quint
The Daily Newsletter
News & Stock Alerts

(Bloomberg) -- Buying Indian consumer stocks could prove rewarding as the government starts to spend more in the villages to boost farm incomes before next year’s elections, according to Macquarie Capital Securities (India) Pvt.

The rural economy is recovering after two straights years of good rainfall and an increase in crop prices, analyst Amit Sinha wrote in a note. Macquarie joins a growing chorus of bulls on consumer staples and branded goods as demand picks up after disruptions caused by the cash ban in late 2016 and the roll out of a nationwide sales tax last July.

Read: Axis Mutual Fund Eyes Indian Consumers’ Wallets for High Returns

Even so, Macquarie’s isn’t a blanket recommendation on the sector. It has stuck to just five companies -- Hindustan Unilever Ltd., Godrej Consumer Products Ltd., Titan Co., Jubilant Foodworks Ltd. and Bajaj Corp. -- while reminding investors that a “rising tide may not lift all boats.”

The increase in size of India’s formal economy after the cash ban and the new sales tax coupled with the recent hike in wages of government staff is lifting sales at automakers, jewelry firms and restaurants, the brokerage said.

©2018 Bloomberg L.P.

Bloomberg
Stay Updated With Stock Market News on BloombergQuint
Subscribe to Bloomberg | Quint
The Daily Newsletter
News & Stock Alerts