Why a weak monsoon may not dampen markets
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Indian stock markets have been awash with worries about a weak monsoon, but a look at the historic performance of the Sensex the June-September season may dispel those fears.
Stock investors tend to track the monsoon season, given lower-than-expected rainfalls can raise inflation worries and hit rural consumption.
However, a look at how Sensex has performed over the monsoon season shows little actual impact from rainfalls. In 2009, a year when India suffered a drought, the BSE index went on to gain 17.1 per cent during the June-September period.
In fact, the Sensex has only fallen twice during periods of short monsoon rainfalls in the past 10 years, when the global financial crisis was percolating in 2008 and during the midst of global bear markets in 2002.
Copyright @Thomson Reuters 2012