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.
While weather forecasters remain divided on how the monsoons will play out in India over the next few months, analysts believe the news at the current juncture - at best - can trigger a knee-jerk reaction in the markets. They believe it is too early to say whether the sub-par monsoon on account of El Nino can seriously dent the market sentiment in the short-to-medium term. "These are just initial forecasts and we will have another round / status update from the weather forecasters a month down the line.
While it hit the national capital two days before schedule, its entry into the financial capital is two weeks late, the Met office said.
This year, the monsoon was above normal in almost all parts, except in North-West India, which comprises the major grain producing states of Uttar Pradesh, Punjab, Haryana, Rajasthan, along with states such as Himachal Pradesh, the NCR, Uttarakhand, and J&K.
Even if the Reserve Bank of India's Monetary Policy Committee decided to hold interest rates in the October meeting, it acknowledged the scope for further rate cuts while waiting for the impact of the past steps to play out.
Anything between 96-104 per cent of the LPA is considered as normal rainfall while precipitation in the range of 104-110 per cent is termed 'above normal'
Scientists had earlier said the cyclone pulled the moisture and convection, impacting the intensity of the monsoon and delaying its onset over Kerala.
Rain for the central and northwestern parts a concern.
SBI was the biggest loser in the Sensex pack, shedding 2.40 per cent, followed by Yes Bank, Bharti Airtel, L&T, Sun Pharma, M&M, ICICI Bank, ONGC, RIL, Asian Paints, Vedanta and HUL, which lost up to 2.37 per cent.
With El Nino emerging, forecasts rainfall at 95% of long-period average.
What stocks will gain from a normal monsoon?
Rainfall in August is predicted to be below normal (less than 94 per cent of LPA), but the situation is expected to improve comparatively in September, the IMD said.
Southwest monsoon hit Kerala on Friday marking the start of the rainy season, four days after its normal onset date.
Experts agree with the assessment that the Budget next month would respond to the predictions of deficient monsoon rains with a policy package. According to them, rain-fed areas, which are likely to be affected by a 'below normal' monsoon, could see increase in allocation in terms of higher spending through the public distribution system and the National Rural Employment Guarantee Scheme.
Predictions of below normal monsoon rains have poured cold water on the bullish growth plans of fast-moving consumer goods companies, which have continued to show robust growth of 17-18 per cent in the face of rising input costs and the economic downturn.
India will receive normal monsoon this season, country's meteorological department said on Wednesday in its forecast for the Southwest monsoon that covers 75 per cent of the country, and thereby may bring much-needed respite to the economy, which is reeling under the catastrophic effect of the Covid-19 pandemic.
East and northeast India recorded 29 per cent rain deficit -- 141.5 mm against the normal of 199.9 mm -- from March 1 to May 3.
India recorded around 16 per cent more rainfall than normal in August, with rainfall over Northwest India recorded at 253.9 mm, the second highest in August since 2001, the India Meteorological Department (IMD) said on Saturday.
Pre-monsoon rainfall, colloquial referred to as "mango showers", is vital to many parts of the country.
The news will augur well for the country as large parts have been witnessing agriculture distress and water levels in reservoirs in west and south India have dipped to low levels.
'We are not saying we are going to face a drought... We are a doing and performing government. A contingency plan is being prepared,' Science Minister Dr Harsh Vardhan tells Rediff.com
'The last time we had such a late withdrawal of monsoon was in 1960 or so.'
Rains have been 5% below normal so far, but Met department sticks to its forecast
Heavy rain in the first week of July compensated for the shortfall but caused flooding in many northeastern states.
The IMD attributed the projection to a weakening of El Nio and the Indian Ocean Dipole turning positive.
Monsoon in August was almost 24 per cent below normal, which was the sixth driest August since 1901. It came on the back of a 7-per cent monsoon shortfall in July.
Analysts expect Nifty to rise up by to 6 per cent in six months, with intermittent corrections likely due to global factors.
Cyclone 'Biparjoy', the first storm brewing in the Arabian Sea this year, has rapidly intensified into a severe cyclonic storm, with meteorologists predicting a 'mild' monsoon onset over Kerala and 'weak' progress beyond southern peninsular under its influence.
Total area impacted across India pegged at 18.9 mn hectares.
Twelve of the 36 meteorological subdivisions recorded deficient rainfall, while the rest witnessed normal to excess rain. In total, 38 per cent of the 662 districts received below-normal rain.
Gross Value Added (GVA) growth in agriculture and allied activities in the first quarter of the 2024-25 financial year (Q1FY25) dipped to 2.7 per cent at constant prices from 4.2 per cent in Q1FY24 due to a drop in output of some crops following heatwave in the main growing months. Low post-monsoon rains, which dried most of the reservoirs in several states across the country, also impacted the production of many crops. At current prices, the growth was estimated at 8.5 per cent as against 4.1 per cent in Q1FY24 due to a spike in food inflation during the April to June months of FY25.
'Southwest Monsoon has advanced into remaining parts of Rajasthan, Haryana and Punjab and thus it has covered the entire country today, the 26th June 2020,' the IMD said in its special Daily Weather Report.
A third of FMCG sales and half of motorcycle sales come from the hinterlands
In another forecast for August, IMD Director General Mrutunjay Mohapatra said monsoon is also likely to be normal in the month.
With the cooling down of heatwaves as the monsoon spreads across the country, power demand has fallen by 12.5 per cent from the start of this month till Monday. Peak power demand of the country had touched a record of 210 Gw last week, mostly due to rising temperatures and opening up of the economy. Compared with the beginning of this month, almost all states have seen a fall in power demand. Punjab, however, is an exception where the power demand on Monday was 17 per cent higher than on June 1.
Officials in the weather department said the monsoon is expected to be below normal because of the El-Nino effect.
Fast moving consumer goods (FMCG) companies are expected to see muted topline growth, with uneven spread of the monsoon impacting demand. Rural demand recovery, too, remains elusive in the July-September quarter. Brokerages expect volumes to remain steady in the quarter on a sequential basis.
As the month ended with 33 per cent deficiency, which translates to around 67 per cent of the Long Period Average, several parts of the country have been witnessing drought-like situation.
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