Policy, valuations could keep rural stocks in play post-2024 polls result

A refocus on defensive stocks with relatively lower valuations and a rural exposure is likely to be where the smart money will go

Most brokerages are betting that the new government will shift to a policy focussing on boosting rural incomes and consumption since that has clearly been a pain point. This could coincide with a cyclical upturn in GDP growth, given the latest estimates. The next Budget will provide a clearer picture but this is a rational rebalancing of portfolios if we assume policy will be driven by domestic political considerations.

In that case, we are likely to see a shift of investment into three or four sectors that tend to traditionally benefit from rural welfare. One is FMCG, second is two-wheelers