The Monsoon Bogey
Or, why the markets don’t look worried.
Everyone is very worried about the delay in monsoons. Rightly so, we all tell ourselves with a solemn face. El Nino is affecting us this year say some. India is an agrarian economy and rains are therefore important, some others say. Inflation will shoot up aver yet others. Investor confidence will shatter, pipes in someone else. Modi govt will find it very difficult to pass their agenda under such circumstances will be another knowledgeable comment.
I ask you this- how many people really know what this El Nino stuff is? I will wager not one out a thousand. How many do you think know the meaning of the word ‘agrarain’ and how that really matters? Again I would give you the same odds as the one quoted earlier. Most of those quoting words like these wont even be aware, perhaps, that over the last two decades India has progressively shifted to becoming a service oriented economy! Tell me, which investor or trader understands inflation or its impact?
In this context, it is interesting to note the statistics quoted in a pink paper. They state , based on data checked over 25 years no less, that in the years that the monsoon is said to be deficient, the sensex has actually finished the year better than the way it started!! Now is that a contradiction or what! We cannot sneeze on a study done on multi decade data, right!
Maybe that is what the market is reading and staying up despite the sweltering heat continuing across the country. Or perhaps it is the fact that Rabi crop has arrived and is helping to keep the prices of pulses down. Maybe it is the fact that it is really July rain deficiency that really impacts the new crop and according to the Met, monsoon is expected to pick up by then?
Whatever be the reason, the markets are not wearing a worried look yet. Is there too much of good cheer around? Can that hold till the rains come? Certainly looks that way. Then if it does happen, will the rains bring in even more cheer? That would be nice, wouldn’t it?