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News Topical, Digital Desk : This time the monsoon broke all records! For the first time in 35 years, the monsoon has arrived before time. It reached Kerala on 24 May instead of 1 June, which is the earliest since 2009. Not only Kerala, but the monsoon also arrived early in the North-East, Goa, Mizoram, Manipur, Nagaland, Maharashtra, and Karnataka. Rains in Mumbai also broke old records.
IMD says that this monsoon will remain active till June 2 and there may be sporadic rain and hailstorm in the northern states. But the question is what will be the effect of this early monsoon on the Indian economy and the stock market? Let's understand this in simple language.
Monsoon: The heartbeat of India's economy
Monsoon in India is not just rain, but the backbone of the economy. Agriculture plays a very big part in the country's 4 trillion dollar economy. A large section of the population is dependent on agriculture. But the effect of monsoon is not limited to farms only. It affects the stock market, industry, and even your pocket.
Early arrival of monsoon: Who is happy, who is sad?
This time the premature monsoon has made some sectors happy, while it has also created problems for some. Let's see which sectors shone and whose pace has slowed down.
Booming atmosphere in the auto sector: Early rains are expected to increase income in rural areas. This will increase the demand for 2-wheelers, 4-wheelers, and entry-level cars. There is also a possibility of a jump in the demand for tractors. Auto stocks have been rising for two days. Investors are ready to capitalize on this opportunity.
Fertilizer stocks shine: Early monsoon means early sowing of crops will also happen. This will increase the demand for seeds and fertilizers for crops. Fertilizer companies' stocks are showing momentum.
Setback to cement sector: Early rains have put a break on construction activity. Infra and real estate projects will be delayed, which will affect the demand and volume of cement. Cement stocks have lost their grip.
Demand for ACs and fridges cools down: Early rains have reduced the heat, which can have a negative impact on the demand for consumer durables like ACs and fridges. Shares of these companies can also see a decline.
Impact of monsoon on the economy: A look
Monsoon affects the Indian economy in many ways. Understand it like this:
Agriculture and rural economy: Good monsoon means good harvest! Kharif crops like rice, maize, sugarcane, and oilseeds will get plenty of water. This will increase the income of farmers and they will spend more. Local businesses will benefit from increased demand in rural areas. But if the monsoon is weak or excessive, then crops may get damaged. This will increase the prices of food items and rural demand will decrease.
Impact on industry: Agriculture-related industries like food processing, textiles, and beverages will get raw materials at cheaper prices due to good monsoon. Also, due to increase in rural income, demand for electronics, clothes, and household items will increase. But weak monsoon will disrupt the supply chain and prices will increase.
Impact on inflation: Due to increased production in good monsoon, prices of food items remain under control. But less rain will reduce crops, which will increase food prices and put pressure on inflation.
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