Mumbai, June 4 Sectors such as tractors, agri-inputs, rural NBFCs, and consumer durables could see 10-15 per cent year-on-year earnings growth in the second half this fiscal (H2 FY26) -- supported by rural liquidity and demand recovery -- if the monsoon maintains above average intensity and distribution across key agrarian regions, according to a report released on Wednesday.
The expectation of a good monsoon continues, and the impact of stable crop output and softening global prices becomes more evident, and a 25-basis-point reduction in the repo rate to 5.75 per cent is widely anticipated in the June 6 policy decision.
A further cut to 5.50 per cent by August is plausible if inflation remains below 4 per cent. These rate cuts could provide a significant boost to rate-sensitive sectors such as housing, automobiles, and NBFCs, said smallcase manager GoalFi in its report.
"India finds itself at a unique confluence in 2025, with the monsoon arriving early and delivering above-average rainfall, and a decisive electoral outcome setting the stage for policy continuity," said Robin Arya, smallcase Manager and Founder, GoalFi.
This alignment offers a stabilising base for inflation control, rural consumption, and capex-led growth. Sectoral rotation is underway, and with supportive monetary policy expected, rural-focused and rate-sensitive segments are poised to outperform in the quarters ahead, he mentioned.
The expectation of a good monsoon is already evident in food inflation. In April 2025, CPI inflation fell to 3.16 per cent, while food inflation dropped to just 1.78 per cent, the lowest level in several years.
The broader equity market could also benefit from increased visibility on consumption, lower inflation, and monetary easing — potentially driving Nifty 50 returns in the range of 6–8 per cent over the next two quarters, led by midcaps and rate-sensitive sectors.
A normal monsoon has historically lifted rural incomes by 5–7 per cent, triggering a ripple effect across consumption-linked sectors.
FMCG majors are expected to see volume upticks in mass-market categories. Two-wheeler sales are also likely to recover, particularly in entry-level motorcycles and scooters. Rural NBFCs and microfinance lenders anticipate improved credit demand and repayment cycles.
Furthermore, the post-harvest festive seasons from August to October could accelerate discretionary spending across rural belts, said the report.
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