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Stock Market

What sectors are prominently affected by the upcoming Indian festive season?

11 Oct 2023 Zinkpot 405
What sectors are prominently affected by the upcoming Indian festive season?
  1. India, at present, is witnessing the onset of the festive cheers which generally starts with Ganesh Chaturthi in early September and extends till mid-November, the end of Diwali.
  2. Diwali is one of the most important festivals for the Indian economy because Indian retail goes on a shopping spree for which the Indians generally save for the whole year. This leads to increased economic activity in the country.
  3. The sectors that usually benefit from this Indian festive season are:
    • Airlines: Increased ticket sales as people travel back to their hometowns.
    •  Paints: Festive season marks the yearly time for painting homes.
    • Apparel & Retail: Purchase of new clothes and home items for the festivities.
    • Gold: The majority of jewelry shopping happens during the festive season plus this festive season is followed by the wedding season in India.
    • Real Estate: Tendency to buy new homes during this auspicious festive season.
    • High-end Tableware: Purchase of new cutlery for the festive season.
    • Radio, Print & Television: Earnings from higher advertising expenditure by companies.
    • Multiplexes: Big movie releases coincide with the festive season.
  4. The stocks of the companies that could soar as a result of the festivities are:
    • Aditya Birla Fashion and Retail: This stock is the perfect beneficiary as it is customary for people to buy new clothes. It obtains 60% of its revenue from Madura Fashions under which the company owns several brands such as Louis Philippe, Van Heusen, Allen Solly, and Peter England. Its international brand portfolio also comes under this division. The remaining 40% of its revenue comes from Pantaloons which the company acquired from Future Retail Group in 2012.
    • Hero MotoCorp: The festive season is expected to give rise to demand for two-wheelers in rural areas. For the June 2023 quarter, the company reported a 4.5% YoY increase in revenue while net profit came in higher by 32% YoY. This company has strong brands under its names such as Splendor, Passion, and Glamour in the bike segment and Pleasure, Maestro in the scooter segment, and others etc.
    • Bajaj Finance: The country is the largest non-banking financial company in India. During the festive season, the company runs zero down payment schemes where one does not have to pay anything at the time of the purchase. The business is well poised to grow over the long term. 
    • Titan: It is the leading jewelry retailer in India which could benefit from festive and wedding season demand. With the easing of pandemic restrictions, people are likely to make purchases that were deferred earlier, indicating a positive outlook for Titan.
    • Reliance Industries: This conglomerate has an interest in various sectors like telecom, retail, and petrochemicals which could see a surge in demand. The rapid growth of Jio and Reliance Retail, combined with the future potential of JioMart strengthens the case for investing here.
    • Havells India: It is a leading FMCG company that should benefit from increased spending on electrical goods and appliances in the festive season.
    • Asian Paints: It is a leading paint manufacturing company in India which is expected to get the lion's market share of domestic paint and coatings sales. It also distributes products related to home décor, bath fittings, and interior designing making it a multi-sector business.
    • Vedant Fashions: This company manufactures trades and sells ready-made men's and women’s ethnic wear collections under the brand names Manyavar, Mohey, Mebaz, Twamev, and Manthan. The upcoming Diwali and wedding season will be the peak business months for this company.

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