The rains have so far been four per cent below normal.
Next week could see some respite from the heat.
Even as the high inflation figure for October has ruled out any possibility of a rate cut by the Reserve Bank of India's (RBI's) monetary policy committee (MPC) in December, a rate cut in February also looks uncertain due to global uncertainties. Economists told Business Standard that unless domestic growth slows markedly, the outlook on rate cut remains unclear. India's headline inflation touched a 14-month high of 6.2 per cent in October, breaching the MPC's upper tolerance band of 6 per cent.
Monsoons have had limited effect on market returns for a given year, report Sachin Mampatta and Sundar Sethuraman.
The Monetary Policy Committee (MPC) is expected to maintain the status quo on policy rates for the fourth consecutive time in its October 4-6 review meeting. The incremental information available since its last meeting in August suggests that growth and inflation prints for the second quarter (Q2) of financial year 2023-24 (FY24) will exceed the committee's projections. However, the Consumer Price Index (CPI)-based inflation is expected to moderate in the second half (H2) of FY24.
This is its biggest single session gain since April 5, when it had surged 577.73 points.
The fast-moving consumer goods (FMCG) sector has underperformed the Nifty over the past year as its 20 per cent return is trumped by 29 per cent of the benchmark index. The FMCG index saw a 2.2 per cent drop in the last session, while the Nifty lost 1 per cent. FMCG is seen as a defensive segment. The demand for staples like personal care products, groceries and snacks tend to be stable. FMCG companies are consistent dividend-payers.
After a steady surge, prices of pulses, except those of urad and masoor to some extent, are showing signs of stabilising amid a revival of monsoon rains over major growing areas of Maharashtra and Karnataka, and on expectations of a rise in imports. Chana prices, which too had moved up in recent months, have dropped by almost 3 per cent since the end of August due to increased liquidation of government stocks, official data shows. Monsoon rains seem to have benefitted the standing soybean crop as well.
Key lending rate (repo) raised by 50 basis points to 4.9 per cent; 2nd increase in 5 weeks
According to the Central Water Commission, of the 91 major reservoirs in the country, 62 water bodies reported 80 per cent or below of normal storage.
Twelve out of the 15 warmest years since 1901 were during the past 15 years -- between 2006 and 2020, according to IMD data.
The overall FPI inflows should move into the range of $15-20 billion in fiscal 2017 with equity dominating with $10-15 billion and debt with $5 billion
The broader markets, however, outperformed their larger peers.
TVS Motor Company met expectations in terms of revenue and posted a strong margin performance in Q1FY25. The key drivers were material cost savings and a better mix. The domestic demand outlook looks good with a rural rebound but geopolitical uncertainties in key export markets may dent overall growth.
The IMD came out with a dismaying prediction.
However, the areas under paddy - the biggest cereal grown during the kharif season - continue to be less than last year, mainly due to delayed onset of rains and also on account of shift towards the more lucrative maize.
The Reserve Bank on Wednesday projected retail inflation to ease to 5.3 per cent in next fiscal from 6.5 per cent this year on assumptions of lower imported inflation, even though core inflation remains sticky. The RBI's inflation outlook for current fiscal has improved from 6.8 per cent projected earlier, to 6.5 per cent, on the back of steeper than expected decline in vegetable prices and Indian basket of crude at $95 a barrel. "Looking ahead, while inflation is expected to moderate in 2023-24, it is likely to rule above the 4 per cent target.
All sub-regions have been receiving good rainfall except the North-east and east region of the country, where the deficiency has reached 23 per cent.
Himachal Pradesh experienced its second snowfall of the season, leading to the closure of 15 roads, including two national highways. A tourist from New Delhi died in an accident on an icy road in the Lahaul Spiti district, while three others sustained injuries.
Prices of perishable items could spike in the near term.
The recent improvement in consumer sentiment is almost entirely a rural India story. Much of the corporate sector reposes faith in rural India to fuel its growth, observes Mahesh Vyas.
The total rainfall till now is not only deficient, but is also erratic in terms of both geographical spread and timings.
The IMD has fancy weather-monitoring radars in the name of providing better forecasts.
Amid the ongoing festival season and ahead of the elections for five state assemblies, the Centre is closely monitoring inflation, particularly in food items, to enable it to take steps to increase their supplies. "There is a complete no-nonsense attitude when it comes to food inflation, and instructions have been issued at all levels to be very sensitive to any possible price movements in any commodity," a senior official explained. Sources have said that all departments dealing with food items have been instructed to keep a close eye on all commodities and maintain a weekly record of their price movements.
Weak monsoon forecast rekindled fears of higher inflation.
In Uttar Pradesh, southwest monsoon has been normal so far where rains and thundershowers occurred in few places since Friday.
Finance Minister Arun Jaitley on Wednesday said the country is on an "upward curve" and a good monsoon, GST passage and increased infra and rural spending will further accelerate the growth.
The broader market outperformed with the S&P BSE Midcap down 0.3%, while the S&P BSE Smallcap was little changed.
The day-long conference will be chaired by Finance Minister Arun Jaitely and presided over by both Food Minister Ram Vilas Paswan and Agriculture Minister Radha Mohan Singh.
Monsoon is likely to be below normal in the current year at 93%.
The Indian Met Department has predicted a below normal monsoon.
Onion prices have been rising due to speculation amid anticipation of below normal monsoon despite sufficient supply in the country.
States have been told to prepare in advance to counter any impact of an adverse southwest monsoon.
The Nifty50 slipped 33 points to close the session at 8,509 after hitting an intra-day high of 8,587.
The Manali-Leh National Highway-3 was blocked after heavy rainfall triggered landslide in Himachal Pradesh's Kullu district on Friday.
Retail inflation increased to four-month high of 5.08 per cent in June as food items, including vegetables became dearer, according to government data released on Friday. The Consumer Price Index (CPI) based retail inflation was on a decline since January, before rising again in June. The CPI-based retail inflation was 4.8 per cent in May 2024 and 4.87 per cent in June 2023.
The IMD chief also allayed fears of occurrence of an El-Nino.
However, it may still not change its stance on the policy rate as inflationary pressures are coming from high commodity prices.
Farmers in Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana anticipate a sharp decline in vegetable output this year, due to sustained declines in the water table after consecutive years of below-average rain. Prices of vegetables are expected to stay high for the next four to six weeks.
'The real repo rate is very high in terms of core inflation.'
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