Initial sentiment on below-average monsoon seem to have been brushed aside by investors as the key benchmark indices BSE Sensex and NSE Nifty gained over 3 per cent in the past 10 trading sessions to June 24 supported by the monsoon covering more of the country.
Earlier, the India Meteorological Department (IMD) had predicted that because of El-Nino effect monsoon this year would not be quite effective. But the quantum of rainfall during June 1-22 period is 21 per cent above normal, according to IMD.
Monsoon rains from June to September are a key factor for global commodities markets as they influence output of various crops in India, which is among the world's leading producers and consumers of wheat, rice, sugar and edible oils. A good monsoon lifts domestic demand. While higher farm output increases the income of rural people, higher demand for goods and services boosts economic growth.
Also, inflation could ease because a better supply of crops would lead to lower prices and take the pressure off the government to step in with fiscal measures and extra subsidies.
Rohit Gadia, founder and chief executive officer, CapitalVia Global Research, says: "A stronger economic outlook can lift sentiment in equity markets, particularly of firms that sell products in rural areas, including consumer goods and automobiles. Progress in monsoon has already started indications of bringing relief to equity markets as the market has stabilised in past few sessions and a recovery seems to be in queue if the monsoon continues the same pace."
Below are some stocks that are likely to benefit with the progress of monsoon: