DARK CLOUDS, BEARERS OF LIGHT
SECTORS WHOSE SHARE PRICES ARE MONSOON DRIVEN
Construction: Cement, steel Personal care: Toothpaste,
shampoo Automobiles: Two-wheelers
Consumer durables: TVs,
refrigerators Entertainment: Cable, DTH
Proccessed food: Instant noodles,
food mixes
HOW DO RAINS AFFECT THE ECONOMY?
India’s GDP has slowed down to a decade’s low of 5% in 2012-13.
Adequate rains, apart from acting as a strong check on inflation by boosting farm output, are critical for swift recovery
A strong farm sector output is critical to bring down food inflation.
High inflation limits scope for the Reserve Bank of India to cut high interest rates.
A good monsoon raises rural incomes, which fuels demands
THE MONSOON AND THE STOCK MARKETS
When raindependent farm output is robust, rural income and spending goes up.
This creates demand for manufactured goods, which in turn helps the manufacturing firms.
Auto-makers to cement-producers, personal care products and consumer durables all depend on rural demand for nearly half their sales.
Without this demand, industrial growth would slow down.