Several global models are predicting El Nio to appear around the second half of the year, which are the crucial rain-bearing months.
Moody's Investors Service on Friday raised India's growth projection for 2023 calendar year to 6.7 per cent on account of robust economic momentum. "Strong services expansion and capital expenditures propelled India's 7.8 per cent real GDP growth in the second (April-June) quarter from a year ago. "We have accordingly raised our 2023 calendar year growth forecast for India from 5.5 per cent to 6.7 per cent," Moody's said in its Global Macro Outlook. - el nino
Ahead of the seven-phase Lok Sabha elections, keeping food prices under check has emerged as one of the topmost priorities for the government. Food prices would likely have a bearing on the preferences of voters. In the past, there have been instances when governments have been voted out over rising food inflation.
The finance ministry on Thursday raised concerns over the possible impact of El Nio conditions on India this year, saying if recent forecasts came true, the country could see lower agricultural output and higher inflation. "Some meteorological agencies predict the return of El Nio conditions in India this year. "If these predictions are accurate, then monsoon rains could be deficient, leading to lower agricultural output and higher prices," the ministry said in its monthly economic review.
Automobile (auto) retail sales in India grew by an impressive 14 per cent in July compared to the same period last year, driven by a surge in the rural economy, good product availability, and product launches. While passenger vehicles (PVs) saw a 10 per cent increase during this period, inventory levels have surged to a historic high of 67-72 days in PVs, equating to Rs 73,000 crore worth of stock, according to the Federation of Automobile Dealers Associations (Fada). This poses a risk to dealer sustainability. Inventory levels in July 2023 were only 50-55 days, equating to a stock worth Rs 49,833 crore. In June 2024, inventory was between 62 and 67 days, with a stock value of Rs 60,000 crore.
Domestic-focused agricultural chemical (agrochem) companies could face near-term headwinds, given the worries on the El Nio effect on monsoons, higher inventory, and pressure on margins. Some of these were reflected in the October-December quarter (third quarter, or Q3) results of companies and may impact them in the current quarter (fourth quarter, or Q4) as well. Nuvama Research pointed out that the sector witnessed mixed performance during the quarter as global agrochem and domestic fertiliser companies maintained growth momentum, while adverse agronomical conditions and excess channel inventory weighed on domestic market volume offtake.
The onset of the southwest monsoon is being keenly watched this year as it may provide an early sign regarding its progress over the Indian subcontinent, particularly when El Nio is expected to rear its head during the latter half of the season.
Above-normal heatwave days are predicted in most parts of central, east and northwest India during this period.
Weather watchers said it can't be known till May whether El Nio will impact the monsoon or not.
To ensure immediate cooling of the body, the hospital has set up a first-of-its-kind heatstroke unit.
El Nino is often associated with below average warmer, dry weather across Asia Pacific region.
The threshold for a heat wave is met when the maximum temperature of a weather station reaches at least 40 degrees Celsius in the plains, 37 degrees in coastal areas, and 30 degrees in hilly regions, and the departure from normal is at least 4.5 notches.
Automotive (auto) major Mahindra & Mahindra (M&M), which is readying to launch nine sport utility vehicles (internal combustion engine/ICE), seven Born Electric Vehicles (BEVs), and seven light commercial vehicles by 2030, has outlined an investment of Rs 27,000 crore in its auto business between 2024-25 (FY25) and 2026-27 (FY27). Over the next three years, the company will deploy Rs 37,000 crore, including its auto business, farm business (Rs 5,000 crore), and service business (Rs 5,000 crore).
The services sector growth in India rose to a 13-year high in September on sharp increase in new business amid strong demand conditions, and job numbers continued to increase as overall business mood improved, a monthly survey said on Thursday. The seasonally adjusted S&P Global India Services PMI Business Activity Index rose from 60.1 in August to 61 in September, signalling a sharp upturn in output. In Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion while a score below 50 denotes contraction.
More than 80 per cent of Indians live in districts vulnerable to climate risks. Among these, Assam, Andhra Pradesh, Maharashtra, Karnataka, and Bihar are the most vulnerable states to extreme climate events.
Elevated food price-led inflation could become a sore point for markets, which they seem to be ignoring at current levels, observe analysts. Retail inflation in India - as measured by the Consumer Price Index (CPI) - came in at a three-month high of 6.52 per cent in January 2023, compared with 5.72 per cent in December and 5.88 per cent in November 2022. The inflation print for February, according to Madan Sabnavis, chief economist at Bank of Baroda, will be critical for the Reserve Bank of India's monetary policy committee.
After lagging behind other segments in the automotive (auto) space over the past few years, two-wheelers are expected to reverse their volume underperformance. After witnessing a 36.3 per cent volume decline over the 2018-19 (FY19) through 2021-22 (FY22) periods, the sector staged a recovery in 2022-23 (FY23), with volumes rising 17 per cent. While volumes are still a quarter lower than the FY19 peak of 21 million units, a double-digit growth trajectory is expected to prolong.
Total area impacted across India pegged at 18.9 mn hectares.
"We have to stand in readiness to go beyond keeping Arjuna's eye to deploying policy instruments, if necessary" to contain inflation, said Reserve Bank Governor Shaktikanta Das on Thursday. Headline consumer price index-based inflation projection for the second quarter of 2023-24 has been revised up substantially, primarily due to the price shock from vegetables, at 6.2 per cent by the RBI form 5.2 per cent estimated in June. Unveiling the bi-monthly monetary policy, Governor Das said the moderation in headline inflation to 4.6 per cent in the first quarter of 2023-24 was in line with the projections set out in the June MPC meeting.
Consumer goods firms and auto companies are witnessing an upturn in rural demand, which had been lagging for most of FY24. Expectations of a bumper rabi crop harvest have helped turn the tide. The Reserve Bank of India's (RBI's) Monetary Policy Committee kept the repo rate unchanged last week, noting that as rural demand catches up, consumption is expected to support economic growth in 2024-25.
Fitch Ratings on Thursday retained India's growth forecast for the current fiscal at 6.3 per cent citing economic resilience despite tighter monetary policy and exports weakness, but upped year-end inflation projection on El Nino threat. The Indian economy grew 7.8 per cent in the April-June quarter of current fiscal on strong services sector activity and robust demand. "The Indian economy continues to show resilience despite tighter monetary policy and weakness in exports, with growth outpacing other countries in the region," Fitch said, while projecting 6.3 per cent growth for current fiscal (April-March), and 6.5 per cent for next fiscal.
Vegetable rates may ease from September, led by tomato prices, which have started showing signs of correction on the back of increased supply, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Wednesday. "Looking ahead, the spike in vegetable prices in July is starting to see a correction, led by tomato prices. "New arrivals of tomatoes in mandis are already softening the prices, coupled with proactive supply management in the case of onions.
The economy is likely to log in a tepid 6 per cent growth next fiscal, in line with the consensus estimates, rating agency Crisil said on Thursday. The agency also sees the economy averaging a growth rate of 6.8 per cent over the next five fiscals. Crisil further said it expects the corporate revenue to log in double-digit rise again next fiscal.
States have been told to prepare in advance to counter any impact of an adverse southwest monsoon.
Hailstorms may cause Rs 12k-cr crop damage, El Nino a bigger worry.
IMD director general K J Ramesh said the Met wasn't being conservative and weather patterns indicated that there was a possibility of rainfall being very near to the 50-year LPA of 89 cm.
The Reserve Bank of India on Thursday decided to keep policy rate unchanged for third time in a row as it maintains heightened vigil on inflation. The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022.
FMCG CEOs indicate that the market should stabilise post the general elections and that some growth should make its way back especially in rural areas
The southwest monsoon has started on a weak note and this has delayed the sowing of kharif crops. Though a cause for concern, the situation hasn't reached a stage where it warrants any panic response. Moreover, according to meteorologists and industry players, monsoon rains will witness a revival in the coming few weeks.
After being underweight on domestic agrochemical companies and preferring global plays, brokerages believe that the former may perform better in the quarters ahead. Domestic crop protection companies have faced multiple headwinds over the past year and a half, given high inventory costs, pricing pressures, lower realisations in the generic segment, increased stocks due to lower infestations, and demand-led hits to volumes. Some of the overhang from previous quarters was reflected in the April-June quarter (first quarter, or Q1) of 2023-24 (FY24) as well, with aggregate revenues and operating profit for the sector down 12 per cent and 27 per cent, respectively.
The monsoon this year in India was likely to be 'below normal' at 95% of LPA: Skymet
Steady progress in June; north and central regions to get good pre-showers
The IMD attributed the projection to a weakening of El Nio and the Indian Ocean Dipole turning positive.
Though the summer is expected to be hotter, global and domestic forecasts point to good rains.
Though early days, meteorologists point towards a neutral La Nina during the initial phase of the four-month monsoon season this year that starts from June. If this holds true, by the time the rains hit the mainland, it could mean there would be one less reason to worry about the prospects of the monsoon this year. Weathermen said making any accurate prediction of how El Nino will behave and what impact it can have on the progress and distribution of rains is difficult to say at this point. A clear picture will emerge around late May or early June.
A minister said the country had 7% less rain than normal.
Till Thursday, the country had received 41 per cent less June rainfall than normal - the scantiest in a decade and one of the rarest occasions when the shortfall in the month was more than 30 per cent - private weather forecaster Skymet said in its daily weather forecast on Friday.
Between June 1 and July 28, about 32 per cent of the 685 districts in the country did not receive adequate rainfall.
The IMD came out with a dismaying prediction.
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