Rural recovery has been smart. What themes to play in the markets? Nikunj Dalmia explains

According to a Morgan Stanley note, high frequency data is indicating faster rural recovery. Vaccination in rural India is more than urban India and the firm expects rural growth to remain healthy, despite risks from poor weather weighing on farm growth.
Analysing this, ET NOW’s managing editor Nikunj Dalmia says, “The data for basic services like electricity consumption, mobility, consumer demand, etc. from rural India has been strong and this indicates the rural recovery is coming along smartly.” But, the markets are not pricing this in. “The markets are not talking about the recovery which could happen during Diwali and Dussehra,” he adds. However, he definitely sees a trade here.
“The theme to play in this case is not FMCG or consumer durables as those stocks are already expensive. The opportunity lies in rural-facing NBFCs and microfinance institutions. A couple of days back, Mahindra & Mahindra Financial Services also indicated in its August business update that collection efficiency stood at ~97%. So, these stocks could see a comeback in the latter half of the year,” he concludes. Watch!
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