Monsoon forecast for 2005

Monsoon forecast for 2005

THE stock markets sharp fall past week overshadowed an important annual feature for the markets - monsoon forecast by government agencies. According to a forecast by the center for mathematical modeling (CMM), monsoons are expected to be above average in the month of June. That is good news for the beleaguered market, as monsoons have a significant bearing on the domestic growth story. At a time when global GDP growth is expected to slow down, good monsoons and a strong domestic consumption story can attract substantial FII investments in India.

Although domestic cues have remained strong on the back of good growth in automobile sales and strong GDP growth numbers, a good monsoon season plays an important role in boosting investor sentiment in India.

Interestingly, there has been a rising investor interest in FMCG stocks with a large mutual fund understood to have bought shares in Nirma. Some bulk deals have also been reported in other FMCG players like Marico. This shows a revival of investor interest in the FMCG sector. Good monsoons could give a boost to the trend.

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