By IANS,
Mumbai: News of the monsoon’s progression will be one of the main triggers for Indian equities markets as normal rainfall holds the key to bringing down inflation, say analysts.
“As we approach June, the focus of the markets would shift to the monsoon. A normal monsoon is very critical for the Indian economy which is battling high food inflation,” said Sanjeev Zarbade, vice president, private client group research, Kotak Securities.
According to the India Meteorological Department, rains are expected to be normal this year, boosting the prospect of a healthy output from the farm sector, which is still majorly dependent on rains.
The latest IMD forecast said that “date of onset of southwest monsoon over Kerala is likely to be on May 31 with a model error of ± 4 days.”
The monsoon is then expected to gradually progress and cover most of parts of central and northern India by July.
Policymakers too are hoping for a good monsoon season as any disruption in rain may cause havoc with the government’s finances, pushing its fiscal deficit higher than the projected 4.6 percent.
A normal monsoon season will help raise output of key crops like rice, sugar bringing a relief to a country battling inflation.