Mumbai, June 4
Sectors such as tractors, agri-inputs, rural NBFCs, and consumer durables could see 10-15 per cent year-on-year earnings growth in the second half this fiscal (H2 FY26) -- supported by rural liquidity and demand recovery -- if the monsoon maintains above average intensity and distribution across key agrarian regions, according to a report released on Wednesday.
The expectation of a good monsoon continues, and the impact of stable crop output and softening global prices becomes more evident, and a 25-basis-point reduction in the repo rate to 5.75 per cent is widely anticipated in the June 6 policy decision.
A further cut to 5.50 per cent by August is plausible if inflation remains below 4 per cent. These rate cuts could provide a significant boost to rate-sensitive sectors such as housing, automobiles, and NBFCs, said smallcase manager GoalFi in its report.
"India finds itself at a unique confluence in 2025, with the monsoon arriving early and delivering above-average rainfall, and a decisive electoral outcome setting the stage for policy continuity," said Robin Arya, smallcase Manager and Founder, GoalFi.
This alignment offers a stabilising base for inflation control, rural consumption, and capex-led growth. Sectoral rotation is underway, and with supportive monetary policy expected, rural-focused and rate-sensitive segments are poised to outperform in the quarters ahead, he mentioned.
The expectation of a good monsoon is already evident in food inflation. In April 2025, CPI inflation fell to 3.16 per cent, while food inflation dropped to just 1.78 per cent, the lowest level in several years.
The broader equity market could also benefit from increased visibility on consumption, lower inflation, and monetary easing — potentially driving Nifty 50 returns in the range of 6–8 per cent over the next two quarters, led by midcaps and rate-sensitive sectors.
A normal monsoon has historically lifted rural incomes by 5–7 per cent, triggering a ripple effect across consumption-linked sectors.
FMCG majors are expected to see volume upticks in mass-market categories. Two-wheeler sales are also likely to recover, particularly in entry-level motorcycles and scooters. Rural NBFCs and microfinance lenders anticipate improved credit demand and repayment cycles.
Furthermore, the post-harvest festive seasons from August to October could accelerate discretionary spending across rural belts, said the report.
— IANS
Reader Comments
Finally some good news for our farmers! 🚜 A good monsoon means better crops, better income and more spending power in rural areas. This will boost our economy from the ground up. Government should ensure fair prices for crops to maximize the benefits.
As someone from a farming family in Maharashtra, I hope the rainfall is well distributed this time. Last year some districts got floods while others faced drought. Proper water management is equally important as good monsoon.
Lower interest rates + good monsoon = perfect recipe for economic growth! 🎯 This could be the turnaround year for rural economy after several tough years. Auto and FMCG stocks might be good bets now.
While the projections look positive, we must remember climate change is making monsoons unpredictable. We need long-term solutions like better irrigation and crop diversification rather than relying solely on monsoon luck.
Good to see inflation under control. Lower food prices will help common people breathe easier. But companies shouldn't use this as excuse to cut procurement prices from farmers - they deserve fair compensation for their hard work.
Excited for the festive season boost! 🎉 Rural India's purchasing power can really drive the economy. Hope this translates to better job opportunities in villages too, so youth don't have to migrate to cities for work.
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