Indian markets tanked on reports of deficient rainfall.
Indian stocks sank, completing the benchmark index’s worst week since October, after Agriculture Minister Sharad Pawar said monsoon rainfall has been deficient. Mahindra & Mahindra, the largest tractor maker, lost 3.9 percent on concern smaller crops will cut farm spending. Reliance Industries, India’s most valuable company, fell to a two-month low, helping to drive the S&P CNX Nifty Index on the National Stock Exchange below a so-called support level near 4,000 for the first time since election results in mid-May. The Sensex, fell 253.24, or 1.8 percent, to 13,504.22. The gauge has dropped 9.5 percent this week, the most since the week ended October 24, 2008. The Sensex is the second-worst performer among 88 benchmark indexes tracked by Bloomberg worldwide.
“The Nifty had support at 4,050, it has broken the psychological level of 4,000,” said Kishor Ostwal, managing director of CNI Research in Mumbai. “Now it can go down to 3,850.”
B K Bandyopadhyay, deputy director general at the India Meteorological Department, said in a phone interview in New Delhi that the monsoon, which runs from June to September, was 8 percent below normal in the week ended July 8. India’s monsoon rainfall has been deficient in the northwest regions, Agriculture Minister Sharad Pawar said. “I hope the situation will definitely improve,” Pawar said in New Delhi. Rains have been 50 percent below normal in the northwest from June 1 to July 8, the India Meteorological Department said yesterday. The region includes the biggest grain growing states of Punjab, Haryana and Uttar Pradesh.
India has enough foodgrain to meet demand for 13 months and rains are progressing, Press Trust of India cited Pawar as saying yesterday.
Indian farmers
Farmers in India, the world’s second-biggest producer of rice, wheat and sugar, depend on the timing of the monsoon to decide which crops to grow. Rains are crucial as about 60 percent of the nation’s arable land isn’t irrigated. Sowing of crops begins in June and concludes by July.
Also Read
“There is some concern on the monsoon, but on the positive side, the corporate results are expected to be good,” said Gopal Agrawal, head of equities at Mirae Asset India Investment Co.
Budget expectations
Stocks and the currency weakened this week on investor concerns that a ballooning budget deficit may lead to a downgrade in India’s credit rating. Finance Minister Pranab Mukherjee on July 6 unveiled the widest budget deficit in 16 years and failed to lay out firm plans to sell state-run assets and ease foreign investment rules. Investor expectations for the budget were high after the Congress won the elections in May. This reduced their dependence on allies such as the communists who opposed asset sales. The government is spending more to speed up economic growth and reduce poverty in a nation where malnutrition is worse than Sub-Saharan Africa.
The author is a Bloomberg News columnist. The opinions expressed are his own