What a normal monsoon means for Indian stock market? Experts list 8 stocks to ride the monsoon theme

Amid heightened uncertainty over the impact of the trade war triggered by US President Donald Trump’s tariff policies on the global and Indian economies, there is some good news for India: the country is likely to receive normal cumulative rainfall this monsoon season.

The India Meteorological Department (IMD) on Tuesday, April 15, predicted above-normal cumulative rainfall during the monsoon season this year. It also ruled out the possibility of El Nino conditions during the entire season.

On last Tuesday, April 8, private forecaster Skymet Weather said India would experience a normal monsoon this year from June to September.

A forecast of normal rainfall is a huge relief for not only farmers but for policy makers also. Monsoon is crucial for India's agriculture sector, which supports the livelihood of about 42 per cent of the population and contributes about 18 per cent to India’s economy.

What normal monsoon means for the Indian stock market?

The monsoon plays a significant role in India's economy, and agriculture is still heavily dependent on It. The amount of rainfall received during this period plays a key role in determining the output of food and cash crops.

Normal monsoons could increase earnings for those employed in the rural sector. They also help keep inflation under control, which raises the prospects of rate cuts by the Reserve Bank of India (RBI).

This could benefit sectors such as FMCG, two-wheeler manufacturers, agriculture and allied industries, and financials.

"As per forecasts, the South-West Monsoon is expected to be normal as per the long-period average (LPA), which could be crucial in reigning inflation. This would have a positive impact on the Indian economy and the stock market, as a normal monsoon will lead to a bump-up in the GDP growth, which is very crucial, apart from a positive impact across sectors," said Aamar Deo Singh, Senior VP - Research, Angel One.

Sneha Poddar, AVP, Research Analyst, Wealth Management at Motilal Oswal Financial Services, underscored that a good monsoon would increase agricultural productivity, resulting in higher income for rural households.

"This would help stimulate rural demand and benefit sectors like agrochemicals, fertilisers, tractors, two-wheelers and FMCG. Further, normal rain helps keep food prices stable by ensuring a steady farm supply, thus controlling food inflation. This provides for reduced input cost and improved profitability for FMCG companies," said Poddar.

Ajit Mishra, SVP of Research at Religare Broking, pointed out that a normal monsoon serves as a crucial macro trigger for India’s rural economy and consumption, offering a compelling opportunity for investors to capitalise on rural revival and agri-linked demand.

Mishra said sectors such as FMCG, agrochemicals, and automobiles will likely benefit from higher rural incomes and growing consumption. Rural-focused microfinance institutions and non-banking financial companies (NBFCs) could also witness improved credit growth and healthier repayment trends.

Moreover, increased rural spending, supported by government-backed housing schemes, may drive demand for building materials and rural housing.

How to play the monsoon theme? Top stocks to buy

Experts say while a normal monsoon is good for the overall economy, it augurs particularly well for the FMCG and auto sectors.

"To effectively leverage the monsoon-driven recovery, investors should adopt a diversified strategy across these key sectors, which are well-positioned to outperform in a favourable monsoon scenario," said Mishra.

Singh of Angel One suggests investors look at frontline stocks such as Nestle, Britannia, Bajaj Auto, and TVS Motor from a medium-term to long-term perspective.

Marico, Mahindra and Mahindra, TVS Motor Company, Cholamandalam Investment and Finance Company and Coromandel International are the top monsoon picks of Poddar of Motilal Oswal.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.