Moneycontrol Pro Panorama | Now, rural India falls behind the curve

Representative Image (Source: Reuters)

Dear Reader,

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

This week’s update of the Economic Recovery Tracker reveals a divergence in rural and urban areas on key indicators such as unemployment and consumer sentiment. One reason could be that the unlocking in cities, as localised lockdowns are withdrawn, is leading to more mobility and as a result an increase in economic activity.

While India needs both urban and rural areas to do well for the economy to progress, rural areas are showing signs of pressure. This is reflecting in retail automobile sales as well. A new risk is that the agriculture sector is facing an unexpected risk from dry weather.

Yesterday, our Monsoon Watch highlighted this aspect and Skymet’s update to its monsoon forecast expects rainfall to lag the long period average. The coming months will reveal the weather’s impact on sowing, but what’s clear is that compared to expectations at the season’s start, the monsoon’s progress so far has disappointed. The impact on food prices and inflation needs to be carefully watched and it will add to the central bank's worries.

Although the monsoon’s impact on the broad market is not much, investors would be wondering at what the correction in small and mid-cap stocks implies. Investors, especially the new ones, have seen markets moving largely in one direction. If you are also wondering, “does this correction present an opportunity or is it an ominous sign of a bigger debacle to follow?”, then do read our research team’s advice to investors.

Meanwhile, the government has decided to make the best of a difficult situation, where it has to do the heavy lifting on the capital investment front, but it does not have the money required to fund all that investment. Enter the National Monetisation Pipeline.

While the structure itself is not new, for instance, road infrastructure projects are built this way, it involves taking existing assets that were built and operated by the government being handed over to private parties to operate. The government has identified a number of assets that it would like to bid out in this process, with a total value of Rs 6 lakh crore. The asset’s ownership will remain with the government, but the right to operate the asset will shift to a new owner. The asset’s ownership is to revert to the government at the end of the tenure. The main question is: Will it work? Here’s our take on why it could be a win-win for all stakeholders.

Here are more investing insights from our research team:

CCL Products: A perfect blend to take a sip

Relaxo Footwears: Will this footwear major continue to gain market share?

What else are we reading today?

Aurobindo Pharma’s Cronus rethink is positive, but it needs to do more

Private rail services will take a long time to evolve

Chart of the Day | The cost of the pandemic to India's growth

A better approach is needed to regulate e-commerce

The ESG investing industry is dangerous (Republished from the FT)

Technical Picks: Hindalco Industries, ICICI Bank, HCL Tech and IndusInd Bank

Ravi Ananthanarayanan
Moneycontrol Pro​