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Will monsoons be deficient this time?
Aug 13, 2014


Even as data suggests that economy might be crawling back to growth path, there is one factor that could derail it. Now that the industrial segment is showing some signs of recovery, the monsoons may play spoilsport. As per the Indian Meteorological Department (IMD), 2014 southwest monsoons are likely to be deficient. Estimated at 87% of the long period average, the rainfall this year has been revised down further by 6% points than the June estimates. These levels are well below the minimum cut off levels of 90%. In North West region also, the monsoon is likely to be 24% below normal. This could have significant implications for Indian economy and markets. Afterall, a lot of recovery this time is based on positive expectations. Not only poor rainfall is likely to moderate that, but could also result in higher inflation. Already, the high cost of food items has led to around 8% increase in retail inflation. Such developments will influence the monetary policy in the near term. They may further adversely impact economic sentiments and prolong the time Indian economy takes to recover. Not to mention the impact on markets. It is because of such erratic factors on the macro front that we often insist that investors should stick to a disciplined investing approach with a keen focus on fundamentals and valuations.

Data Source: IMD & Business Standard
*LPA= Long period average
NW^= North West, NE$= North East, SP# = South Peninsula

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