It is no surprise that some stocks in the air-conditioning space have outperformed the overall market in the last couple of months. The gains could continue given that India Meteorological Department (IMD) has predicted above-normal temperatures in key regions and an extended summer season. After a forgettable CY18 due to unseasonal rains, regulations and higher raw material costs, brokerages expect a better CY19 for cooling majors on account of lower costs and a spike in demand. In addition to cooling solutions, companies in the beverages space, too, stand to gain from an expected surge in demand as summer takes hold.
The second set of companies that will benefit are those that cater to customer needs during the holiday season. Given the school break, this is the peak travel season and companies catering to the ‘friends and family’ segment are expected to gain, especially in the hospitality and transportation segments. There are two stocks that have the largest reach, be it in the number of hotel rooms or domestic market share with a pan-India network, which should take a major share of the gains.
Leisure and entertainment activities is the other theme to find favour among investors during holidays. Companies in the quick service restaurant space, multiplex chains and personal luggage makers could see a surge in footfalls. The consumption theme for this set of stocks is expected to be driven by higher disposable income, the need for replacement, and lower penetration levels.
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