A common question for investors in India is whether or not there is any impact of the monsoon on the share market.\u00a0 In this article, we explore exactly how the monsoon rains do have an impact on the stock market, both negatively and positively, albeit not in a direct manner.<\/p>\n
India is a nation that is largely agrarian.\u00a0 That is to say that it is highly dependent on agriculture.\u00a0 With around 55% of arable land being fed by rainwater, it is easy to understand why the monsoon is so very important for getting good yields from the farms.\u00a0 It is the yield rate which will have an effect on the markets.<\/p>\n
The primary income of rural Indians is from farming and farming related occupations.\u00a0 When crop yields are good, rural income is boosted by crop sales.\u00a0 This encourages farmers to make more purchases and invest.\u00a0 It also means more disposable income in the rural areas, which benefits companies that carter for rural Indians.\u00a0 A good monsoon therefore equals good yields and that equals good news for those companies who are listed on the stock market that sell to rural areas.\u00a0 Their stocks receive a little boost.<\/p>\n
In the opposite scenario, a poor monsoon leads to poor yields in the fields.\u00a0 Shortages of crop-grown commodities leads to increased demand for those particular commodities.\u00a0 This situation can be advantageous for certain commodity traders.<\/a>\u00a0 To be specific, those traders who anticipated a bad monsoon may have bought FUTURES in order to ensure that they can buy quantities of specific commodities at a predetermined price prior to the monsoon taking place.\u00a0 They will then have full rights to purchase them at the agreed price, and then immediately sell them on for a profit at the current (inflated) market price once the harvest is over.\u00a0 However, they will be in the minority.<\/p>\n While there are many scientific bodies that study rainfall, analyse its trends, and predict its future, their predictions are not 100% accurate and can not be totally relied upon.\u00a0 They may serve to be of more use for farmers to decide when and how much of particular crop they decide to sow.\u00a0 The overall effects of the monsoon have shown to have only a small impact on the stock markets, especially when taken outside of commodities.\u00a0 It may be surprising to you just how the share markets recover from monsoon effects.\u00a0 When a poor monsoon season has passed there is no time to dwell, as life goes on and so does trading.\u00a0 We also have to be clear that it is not the monsoon itself that has any bearing on the stock markets, but it is the YIELDS from the fields which decide whether it will be a good or a bad year.<\/p>\n In future as India\u2019s infrastructure improves and develops, it is hoped that farmers will be less reliant on monsoon rains.\u00a0 This can can be achieved by developing new and improving existing irrigation systems, rainwater harvesting and storing water for the future, and desalination plants which will provide cleaned sea water upon demand.<\/p>\n <\/p>\n If you would like to invest and are worried about the issue discussed in this article, you can contact GOODWILL INDIA who will be happy to converse with you and help you identify Key areas to invest in Stock Market simultaneously to avoid impact of monsoon, or at hedge against it.\u00a0 GOODWILL INDIA, the broker with the extra-low charges, and the extra-high value.\u00a0 www.gwcindia.in.<\/a><\/p>\n <\/p>\n <\/p>\n <\/p>\n Stepping into Share Market Investment: A Guide for Beginners<\/a><\/strong><\/p>\n How to Start Day Trading Online in India for Beginners?<\/a><\/strong><\/p>\n Top 5 Stock Trading Strategies for Beginners in India<\/a><\/strong><\/p>\n How to Invest in Equity Markets: A Beginner\u2019s Guide<\/a><\/strong><\/p>\n The Best Investment Ideas for Beginners in India<\/a><\/strong><\/p>\n A to Z of Currency Trading in India for Beginners<\/a><\/strong><\/p>\n Mutual Fund Investment Ideas for Beginners<\/a><\/strong><\/p>\nExtent of the Impact<\/h4>\n
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