The market continues to remain jovial. Though little has changed on the ground, sentiments are certainly running high as the country continues to come out of lockdown.

However, the wiser ones would now be waiting for further guidelines on lockdown which is ending on May 31. As of now, the major industrial states like Maharashtra, Gujarat, TamilNadu and Telangana continue to remain severely impacted under Covid-19 spread and likely to remain under the blanket lockdown.

The market will keenly observe the GDP numbers of the Jan-March quarter, set for release in the post-market hours. It will be the first major official estimate of COVID-19's impact on the Indian economy. Most of the analysts are expecting GDP growth in the range of 1.5-2.5% in Q4.

However, the impact of lockdown is going to be much more severe in Q1FY21 as the country was under complete lockdown in April and May while the recovery in June is going to remain modest, at best.

Rain, rain (don't) go away!

One reason why the market is looking up is that the old saviour of India is lurking on the horizon again. The southwest monsoon is expected to reach the Kerala coast a week earlier than expected. India Meteorological Department (IMD) in its revised estimate stated that monsoon could hit the Kerala coast around June 1 now revised from its earlier estimate of June 6.

Monsoon is absolutely crucial for the revival of rural sentiments as the large population continues to depend on agriculture. A good monsoon based season could once again generate demand for 'in the coma' sectors like tractors, two-wheelers and the NBFCs.

Based on the earlier prediction, India's growing agrochemical industry is also optimistic to have a good season. IMD has predicted good monsoon with seasonal rainfall likely to be 100% of the Long Period Average (LPA).

Key takeaway:

It's an unshakable bond; between the monsoon and the Indian economy. (One dependency that India could never get rid of!)

Around 50% of India's labor force is employed in agriculture while 60% of India’s agricultural land depends on monsoon rain for irrigation. No wonder then, on why the former Finance Minister, Pranab Mukherjee. described the annual Monsoon as the real Finance Minister of India.

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