Monsoon impact on stock markets: 14 stocks where analysts are positive

Monsoon impact on stock markets: Dalal Street just heaved a sigh of relief after IMD on Monday projected the monsoon for the year 2018 at 97 per cent of the long term average (LTA). The announcement comes after private weather forecaster Skymet earlier predicted the monsoon at 99 per cent of LTA for this year. This will be third consecutive year of normal monsoon after two successive droughts that India witnessed in 2014 and 2015. Brokerage Kotak Securities noted while the June-September monsoon at 97 per cent of LPA qualifies as 'normal' southwest monsoons, the probabilities are more skewed towards the weaker side.

"We believe it is premature to conclude on effects on growth and prices though this forecast should bode well for the rural sector. We maintain our call for an extended pause from the RBI, which will be on a wait-and-watch mode until there is significant adverse impact from the monsoons," it said in a report. The IMD releases its first preliminary forecast in April, which is followed by another forecast in June, which gives a more realistic picture of the monsoons. In fact, the detailed estimates of monsoon distribution will be known by June by when there will be a clearer picture on El Nino.

Monsoon in the range of 96 per cent to 104 per cent of LTA is considered to be a normal monsoon. While monsoon above 110 per cent of LTA is considered excessive, monsoon below 90 per cent of LTA is classified as drought conditions.

We have collated a few monsoon-linked stocks where analysts are positive:

Avinash Gorakssakar, HoR, Joindre Capital

• Buy M&M with a target price of Rs 950
• Buy DHFL with a target price of Rs 650
• Buy Coromandel International with a target price of Rs 650
• Buy Ashok Leyland with a target price of Rs 175

Sandeep Jain, Director - Tradeswift Broking

• Buy Monsanto with a target price of Rs 3300
• Buy Sharda CropChem with a target price of Rs 520
• Buy Ramco Industries with a target price of Rs 320

CLSA

Rural recovery expected thanks to normal monsoon. Rural income to witness a pick-up that will be positive for stocks like ITC, Emami, M&M, Godrej Consumer and Ramco Cement

HDFC Securities

• Rallis India (44% upside)
• Dhanuka Agritech (27% upside)
• Insecticides India (25% upside)