Monsoon Stock Picks: Jefferies Prefers TVS Motors, Bharti Airtel, Godrej Consumer; Trims Power For Steel

Jefferies maintained a constructive outlook on India's economy, supported by expectations of a second consecutive above-average monsoon. This is seen as a key driver for agri GDP growth, rural consumption, and a softer inflation trajectory, setting the stage for further monetary easing. The firm anticipates an additional 75 basis points in rate cuts, aided by continued low inflation.

The India Meteorological Department has projected the 2025 monsoon (July–September) to be 6% above average, following an 8% surplus in 2024. Early arrival—about 10 days ahead of schedule—and a favourable spatial distribution of rainfall are positive signs for kharif crop yields. June rainfall is already expected to exceed normal levels by over 8%.

Historically, strong monsoons support rural income and consumption, Jefferies said in its note on Friday. A positive rural outlook typically drives long-term agri GDP growth of around 4.6% year-on-year. The recent softening in food inflation—down 8 percentage points from the October 2024 peak to April 2025—is also attributed to improved agricultural supply conditions. This should help maintain a supportive environment for further rate cuts, Jefferies added.

Rural demand is showing early signs of revival, with improvements in two-wheeler and FMCG sales. The government’s increase in Minimum Support Prices and renewed rural schemes are expected to reinforce this trend. Jefferies continues to favour rural-focused stocks, naming TVS Motors Ltd., Bharti Airtel Ltd., Vishal Mega Mart Ltd., and Godrej Consumer Products Ltd. as top picks.

However, the early monsoon may pose short-term disruptions. Sectors like cement, capital goods, and power could face logistical delays and softer activity in the June 2025 quarter. For instance, infrastructure projects and industrial activity may slow temporarily, according to the brokerage.

In response to these dynamics, Jefferies has adjusted its model portfolio. It has reduced exposure to the power sector by 1.5 percentage points, moving the weight to metals. The brokerage cut JSW Energy Ltd. by 1.5 percentage points and added Jindal Stainless Ltd., reflecting a more favourable near-term outlook for metals versus power in its model portfolio.