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Monsoon 2025: Above normal trend continues!

ICICIdirect Research 19 Sep 2025 DISCLAIMER

Monsoon 2025 has been true to its forecast with cumulative rainfall as on date at 108% of LPA i.e. above normal in nature. This is amidst revised monsoon forecast by IMD for 2025 pegged at 106% of LPA.
Cumulative Rainfall has been healthy. Barring Bihar, Arunachal Pradesh and Assam, other states have received normal to above normal rainfall in the current monsoon season. Having said that eastern part of India is currently witnessing heavy downpour, which might help to reduce the deficit by end of the monsoon season.  
Monsoon has now started its withdrawal path.
Total sown area for Kharif 2025 has been satisfactory at ~111 million hectares, in tandem with its last year and 5-year averages despite heavy rainfall in states like Punjab, a key agrarian state.
India’s foodgrain production is pegged at 362.5 million tonnes for 2025-26, a growth of 2.4% YoY.  The India’s cotton crop for 2025-26 is expected to be between 325 Lakh and 340 Lakh bales (4-9% increase) compared to 312 lakh bales this year (2024-25).
Positive monsoons are good for domestic rural economy with beneficiaries being farm equipment (tractor) players, consumer companies in the durables and staples domain as well.
Cotton prices have corrected from its high and is currently trading at Rs 149/kg. With higher cotton production, we expect cotton prices to remain stable and marginally decline, which will provide some cushioning to the EBIDTA margins in the current background of tariff related uncertainties. Overall positive narrative is building up for textile companies.

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