All around the world in the equity markets, seasonal variation and calendar anomalies are a phenomenon. Many different factors such as the political vicissitudes, economic, financial and even the weather can affect the performance of the stock market. India is an agrarian nation. This means that this nation is heavily dependent on the monsoons for economic growth.
The agrarian culture in our economy faces many constraints such as lack of irrigation water, basic infrastructure etc. Hence, the farmers have to be dependent on the monsoons to have a fruitful crop season. The yield for a particular year depends on the extent of the rains in that year.
The Indian economy is categorized as a rural economy as well as an urban economy. When it comes to online share trading, if a trader is trading in commodities such as wheat, cotton and the like, then the dependency of monsoons does have an impact. If there is low rainfall for a particular year, then the farmers have a low yield, which leads to lower disposable income. In such cases, farmers buy a few articles, and the quantity produced is less.
Companies, which cater to the rural economy and are listed on the stock market, are impacted by poor rains. These companies have low sales and hence small profits. The performance of these companies in online share market trading depends on the profits. If the monsoons are good for a particular year, then the stocks prices perform better. If the monsoon is sluggish, then the stock prices see a deep and lead to the contraction of the rural economy. However, the impact of monsoons can only be slightly seen in the rural economy. There is hardly any correlation to suggest that monsoons have a dramatic effect on the market sentiments as a whole.
2019 Monsoon in India: Current Scenario
The rate of summer-sown crops has seen a decrease of 10% as compared to last year. The farm Ministry’s data as of June 28 showed a weak monsoon as the primary reason for the delayed sowing of the summer crops in most parts of the country. Consumption is one sector which can face the brunt of inadequate rainfall.
According to reports, India has faced the driest June in 5 years. Analysts predict that if the monsoon does not improve, then it can affect the harvests and the rural demand.
Even though the stock market sees fluctuations pertaining to global and natural events, Indian monsoons and stock market see lesser impacts. The stock market is a function of many variables such as growth in earnings, interest rate trajectory, valuations across emerging markets, risk on-off sentiments, flows from foreign and local investors etc. One cannot judge the performance of the online share market by solely focusing on the monsoons.
For a trader to trade efficiently in the stock market, there are many Indian stock market apps available. These apps give real-time data and can help traders and investors gauge the direction in which the market is going on a particular day. Stock market apps in India have gained popularity and can help traders see the trends in the monsoons.