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News: As per press release (First Stage Forecast) issued by IMD yesterday, monsoon 2023 is expected to be normal in nature at 96% of LPA. El Nino conditions, which are expected to develop over the later part of the monsoon season are seen to be neutralised by potential positive Indian Dipole (IOD) movement in the Indian Ocean. It has assigned 49% probability to normal – positive monsoon and 51% probability to below normal monsoon (Skymet forecasted it at 60% probability)
Views: This comes as a sign of relief as previous forecasters had predicted below normal monsoons for India in 2023. We believe this is positive for the entire automotive space and more so for rural facing segments like tractors (with key beneficiaries being: M&M, Escorts), commuter motorcycle space (Hero MotoCorp, Bajaj Auto) and entry level PV segment (Maruti Suzuki). Key monitorable, going forward, would be IMD’s second range forecast at the end of May 2023 specifying month wise rainfall forecast as well as colour on its geographical distribution
Impact: Positive