How monsoon influence market sentiments

Mumbai is the financial capital of the country and currently things are extremely hot here on two counts - firstly, stock markets are trading at new lifetime highs and secondly, the monsoon seems to be delayed.

Part of the delayed monsoon could be attributed to the recent cyclone 'Biparjoy' which made landfall in Saurashtra and parts of Gujarat and was quite devastating. As an effect of the cyclone, it did bring rain to parts of Maharashtra and Rajasthan, besides Gujarat, but this was not part of the monsoon. On the contrary, Biparjoy pushed back the monsoon.

Markets seem to have cooled off on Friday and lost further ground to the losses it suffered on Thursday. Suffice to say that there was a cooling effect. A day later, Mumbai had monsoon showers, and these too have had a salutary effect on the temperature.

Leaving aside the simile that markets have cooled off with the onset of monsoon, the fact remains that monsoon was delayed. Did it impact the markets? Certainly not, as is scaled new heights.Markets have become mature enough to realise that India is a large country and can be compared to a continent.

To expect precision accuracy in the onset of monsoon, its arrival dates, the intensity of rainfall and the withdrawal of the same cannot happen as ideally desired. Predicting trends is easier but not the outcomes.

Markets realise these factors and do not react in a knee jerk reaction to the same. They look at many more factors before pressing the panic button. This maturity is being seen that even though there has been a delay of about three weeks in Mumbai, markets were at a lifetime high.

Could the situation turn worse? Could the market get nervous? Yes, and why not? If the progress of the monsoon is weak in the next two weeks, it does not cover large parts of the country.