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New Delhi: The ongoing volatility in the prices of key food items such as tomatoes, onions, and potatoes (collectively known as TOP) and pulses continues to pose significant challenges for the <keyword id="19913109" type="General" weightage="20" keywordseo="monetary-policy-committee" source="keywords">Monetary Policy Committee</keyword> (MPC) of the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="100" keywordseo="RBI" source="keywords">RBI</keyword>), highlights a report by <keyword id="19898108" type="General" weightage="20" keywordseo="SBI" source="keywords">SBI</keyword>. "Current volatility in prices of TOP and pulses continues to challenge the MPC, keeping the headline above target at 5.1 per cent in June 2024," said the report. The report highlighted that this instability in <keyword id="19960157" type="General" weightage="20" keywordseo="food-prices" source="keywords">food prices</keyword> has kept the headline Consumer Price Index (CPI) <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> above the targeted level, reaching 5.1 per cent in June 2024. While the inflationary pressures remain a concern, the report stated that there is hope on the horizon due to the currently above-normal <keyword id="19968257" type="General" weightage="20" keywordseo="monsoon" source="keywords">monsoon</keyword> and increased sowing activity, which are further supported by the potential onset of a La Nina event later in the year. "The currently above-normal monsoon and sowing, backed up by a potential La Nina event later, promise reprieve in later quarters," said the report. Importantly, the report added that it is now expected that the CPI will remain above the RBI's medium-term target of 4 per cent in all quarters up until the first quarter of FY26. This persistent overshoot highlights the ongoing inflationary pressures in the economy. "Notably, now the CPI is expected to be above RBI's target of 4 per cent in all quarters till Q1FY26," the report added. However, the report noted that the Monetary Policy Committee expects a moderation in inflation during the fourth quarter, which is anticipated to help keep the overall CPI projection for FY24 unchanged at 4.5 per cent. The SBI report also believes that the volatility in food prices, driven by uneven spatial and temporal distribution of monsoon rains, presents an upside risk to the current inflation projections. As a result, SBI maintains its CPI estimate for FY25 at 4.7 per cent year-on-year. In the latest MPC meeting on Wednesday, RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword> said inflation will moderate from July onwards as the monsoon has improved and global food prices have shown signs of easing in July. Das said, "Global food prices showed signs of easing in the month of July after registering an increase since March 2024." A degree of relief in food inflation is expected from the pickup in southwest monsoon and healthy progress in Kharif sowing. Buffer stocks of cereals continue to be above the norms, according to RBI Governor Shaktikanta Das. Das added, "Assuming a normal monsoon and taking into account the 4.9 per cent inflation print, Q1 CPI inflation for the current financial year (2024-25) is projected at 4.5 per cent, with q2 at 4.4 per cent, Q3 at 4.7 per cent and Q4 at 4.3 per cent. CPI inflation for the first quarter of next financial year (Q1 2025-26) is projected at 4.4 per cent."

High food prices raise concerns but improved monsoon offers hope for RBI: SBI report

New Delhi [India], June 22 (ANI): Indian stock indices traded largely steady on Thursday morning after their all-time highs reached in the previous session. Meanwhile, analysts cautioned high valuation may keep investors at bay for the time being. Sensex was just 14 points lower and <keyword id="6354813" type="General" weightage="80" keywordseo="nifty" source="Orion">Nifty</keyword> points higher at the time of writing this report. Among Nifty sectoral, Nifty auto, Nifty metal, and Nifty media jumped while Nifty IT, and Nifty FMCG among others tanked. On Wednesday, the benchmark index Sensex, which has been buoyant over the past several sessions, touched its all-time high. The rise in domestic stocks is in tune with the global market rally and firm domestic macro fundamentals. Sensex touched its record high of 63,588 points to later settle at 63,523 points, up 0.31 per cent. Sensex, so far, accumulated 4 per cent returns this year, rising about 23 per cent over the past 12 months. Strong fundamentals including a firm GDP outlook, moderate inflation, and strong purchases by foreign investors saw the markets trading in the green. <keyword id="8690584" type="General" weightage="50" keywordseo="vk-vijayakumar" source="Orion">VK Vijayakumar</keyword>, chief investment strategist at Geojit Financial Services cautioned a sustained rally beyond the record highs is difficult since current valuations of stocks in India are, according to him, rich. Going ahead, the slow progress of the <keyword id="164166" type="General" weightage="50" keywordseo="southwest-monsoon" source="Orion">southwest monsoon</keyword> may remain a concern for the financial markets. Monsoon, typically, has a bearing on the country's economic outlook. Southwest Monsoon hit India on June 8, arriving in Kerala a week after the scheduled onset of June 1 and its progress so far has been patchy and uneven. The monsoon normally hits Kerala on June 1, with a standard deviation of about seven days. It is crucial, especially for the Kharif crops. The country has three cropping seasons -- summer, kharif, and rabi. "India stands out among emerging markets with the best growth-inflation balance. However, the big wall of worry is the rich valuation, which might invite institutional selling beyond a point," added Vijayakumar. Meanwhile. stocks in the US finished lower on Wednesday for a third straight day after Federal Reserve Chairman <keyword id="1727754" type="General" weightage="50" keywordseo="jerome-powell" source="Orion">Jerome Powell</keyword> warned that policymakers still expect more interest-rate increases this year to combat inflation -- doubling down on his hawkish tone that the central bank isn't done with its aggressive monetary tightening campaign. "Inflation has moderated somewhat since the middle of last year. Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go," Powell said Wednesday as part of its 'Semiannual Monetary Policy Report to the Congress'. The <keyword id="6356435" type="General" weightage="50" keywordseo="us-federal-reserve" source="Orion">US Federal Reserve</keyword>'s monetary policy committee had recently paused the key interest rate. The policy rate has been maintained at 5.0-5.25 per cent, which was near zero after the outbreak of COVID-19, in the fight against inflation. Raising interest rates suppress demand and typically helps in reducing inflation. (ANI)

As Indian stock indices hit their peaks, analysts worry about high valuations

<ul><li>June has witnessed erratic rainfall resulting in many states receiving deficit rains.</li><li>Kharif acreage lagged the year-ago level by a significant 24%, as on June 24, 2022.</li><li>Rice and cereal sowing has been much lower than expected while sugarcane and jute coverage has been good.</li></ul>India’s food inflation has been affecting the common man, and the Indian central bank, RBI, has been banking on a good Kharif crop to arrest it. But looks like rain gods are in no mood to relent. Except for the East and Northeast, India witnessed a rainfall deficit in three of the four weeks of June. <keyword id="6358301" type="General" weightage="20" keywordseo="monsoon" source="Orion">Monsoon</keyword> directly impacts India’s growth and inflation outlook and the <keyword id="164166" type="General" weightage="20" keywordseo="Southwest-Monsoon" source="Orion">Southwest monsoon</keyword> is important as the country receives about 75% of annual rainfall between June and September. A good monsoon soothes not only farmers but the economy and markets too. The pan-India <keyword id="14373468" type="General" weightage="20" keywordseo="Southwest-Monsoon-rainfall" source="Orion">Southwest Monsoon Rainfall</keyword> was below normal at 92% of long period average (LPA) in June 2022. This is in line with the lower end of the forecast range (92-108%) for the month provided in the Indian Meteorological Department’s (IMD’s) report released in May 2022. Sugarcane and jute are fine but rice and cereal coverage lags Since the forecast is correct at the lower end, crop sowing patterns are affected and the much expected bumper crop might not come to be. Rice and cereal sowing has been much lower than expected. Kharif sowing in general has declined 5.3% on a yearly basis as on July 1, 2022. “While roughly 96-97% of last year’s area has been covered for sugarcane, and jute and mesta as on July 1, 2022, it is moderate in the range of 20-24% in the case of oilseeds, coarse cereals and pulses, followed by a modest 10.3% coverage for rice,” said the report by ICRA. The report mentions that with an uneven start to the monsoon season, Kharif acreage lagged the year-ago level by a significant 24%, as on June 24, 2022. Another concern is labour shifting back to urban centres with a revival in service sector demand, which impacts the availability of manpower in the rural areas to till the land. “Also, the availability of fertilizers poses a concern, posing a downside to acreage,” added the report. Sowing can pick up if monsoon progresses well However, the IMD expects monthly rainfall in July 2022 over the country as a whole to be normal. Following heavy rains in the third week of June, sowing of kharif crops picked up pace in the last week of the month. “Typically, sowing gathers steam in July, so the lagging pace of Kharif acreage can be partly made up if the monsoon progresses well through the next month,” said a report by ICRA. June witnessed erratic rainfall as many states received deficit rains. Over 30 large reservoirs across India have not just less water compared to last year, but far less compared to the average of the last 10 years. Data from India Meteorological Department (IMD) showed that Kerala, Maharashtra, Gujarat, Chhattisgarh, Odisha, Jharkhand, Mizoram, Manipur, Uttar Pradesh, Delhi, Uttarakhand, Himachal Pradesh, Punjab, Haryana and the union territories of Andaman &amp; Nicobar Islands, Dadra, Nagar Haveli and Daman &amp; Diu and Ladakh, received deficit rainfall. Reservoir storage now trails year-ago level with gaps in all the regions, except the North <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Regions wise reservoir storage levels </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">July 2021 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">June 2022 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Northern </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">19% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">23% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Eastern </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">32% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">17% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Western </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">24% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Central </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">29% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">28% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Southern </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">42% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">35% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Total </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">32% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">28% </td></tr></tbody></table> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/reliance-has-to-pay-6-per-litre-of-petrol-13-for-diesel-exported-as-tax-but-rising-margins-may-cushion-it/articleshow/92675488.cms">Reliance has to pay ₹6 per litre of petrol &amp; ₹13 for diesel exported as tax — but rising margins may cushion it</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/cryptocurrency/news/4-out-of-5-traders-go-slow-on-cryptocurrency-investments-after-new-crypto-tax-wazirx/articleshow/92676673.cms">4 out of 5 traders go slow on cryptocurrency investments after new crypto tax – WazirX</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/environment/news/due-to-delayed-monsoon-and-an-extended-summer-ridden-with-heatwaves-indias-water-reservoir-level-has-been-dipping/articleshow/92676758.cms">Heatwave followed by a delayed monsoon is drying up India’s reservoirs that provide drinking water</a>

Rice, cereal sowing suffers due to delayed monsoons drenching hopes of moderating food prices

<ul><li><keyword id="6366970" type="General" weightage="80" keywordseo="imd" source="Orion">IMD</keyword> has predicted that the monsoon will also progress into more parts of Gujarat, Telangana and parts of Chattisgarh in the next 2-3 days.</li><li>Whereas, Assam, Meghalaya and Arunachal Pradesh to experience isolated rainfall on June 16 and June 17, Bihar and Jharkhand on June 18 and 19.</li><li>The national capital of India is likely to witness thunderstorms with rain from June 18 to 20, as per IMD.</li></ul>The much awaited monsoon is likely to advance in North Arabian Sea, Gujarat, entire Marathwada, some parts of south MP, most parts of Vidarbha, entire Telangana, some parts of south Chhattisgarh, as per predictions by the <keyword id="55209" type="General" weightage="20" keywordseo="Indian-Meteorological-Department" source="Orion">Indian Meteorological Department</keyword> (IMD). Furthermore, the IMD has predicted that the monsoon will also progress into more parts of Chhattisgarh and Odisha, some parts of Gangetic West Bengal, Jharkhand, remaining parts of sub-Himalayan West Bengal, more parts of Bihar and some parts of east Uttar Pradesh in the next 2-3 days. Northeast India and sub-Himalayan West Bengal and Sikkim are to witness an intense rainfall for the next five days. Whereas, Jammu division, Himachal Pradesh, Uttarakhand and Punjab are predicted to have isolated rainfall on June 17, due to Western disturbances and lower level easterlies influence. Similar conditions are to prevail in Assam, Meghalaya and Arunachal Pradesh on June 16 and June 17, Bihar and Jharkhand on June 18 and 19. The national capital of India is likely to witness thunderstorms with rain from June 18 to 20, as per IMD predictions. Similar conditions are likely to prevail in Punjab, Chandigarh and Haryana and isolated rainfall in Rajasthan over the next five days. Coastal Karnataka, Konkan, Goa, Kerala, Mahe and Lakshadweep — to experience lightning or thunderstorms for the next five days. Scattered to fairly widespread rainfall will also be seen in Madhya Maharashtra, Marathwada, Andhra Pradesh, Yanam, Telangana, Tamil Nadu, Puducherry and Karaikal in the next five days. Isolated heavy rainfall is also likely to be seen over Jammu division, Himachal Pradesh, and Uttarakhand on 17 June. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/thelife/news/646-billion-thats-the-economic-cost-of-violence-in-india/articleshow/92252398.cms">$646 billion — that’s the economic cost of violence in India</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/indias-exports-have-a-long-way-to-go-and-the-curbs-are-not-helping/articleshow/92254085.cms">India’s exports have a long way to go and the curbs are not helping</a>

Monsoon to advance in various parts of India this week; Delhi to see thunderstorms

<ul><li>A <keyword id="48670" type="General" weightage="20" keywordseo="Morgan-Stanley" source="Orion">Morgan Stanley</keyword> report says that rural demand is set to rebound, helped by wider reopening, improving labour market and more.</li><li>Its rural activity tracker has picked up in the last 3-4 months.</li><li>Rural wages have been showing improvement in August and rural unemployment hit an 8-month low in September.</li><li>The structural outlook of rural areas is improving as well – thanks to policymakers’ focus on boosting rural incomes.</li></ul>Rural economy is all set for a rebound as per readings from four key indicators – employment, credit offtake, auto sales and trade, according to a recent report by Morgan Stanley. “We believe rural demand is set to rebound, helped by wider reopening, improving labour market conditions, and improving terms of trade for the rural sector,” the report said. Apart from increasing food inflation since the start of this financial year, India’s villages have been suffering from the effects of the second wave of the pandemic – which dislocated livelihoods. Government spending too was reduced, as compared to the first wave. However, the tide seems to be turning. “High-frequency data suggest that overall economic activity has been normalising over the past three months after remaining sluggish in the trailing 12 months. Our consolidated rural activity tracker shows a pickup in YoY terms over the last 3-4 months,” the report said. Cyclical outlook The first indicator is the unemployment rate which hit an 8-month low in September, as per CMIE. Secondly, two-wheeler sales reached 1.1 million in September, its highest since the pre-pandemic month of October 2020. Agricultural credit growth also hit its highest in nine months in August – at 13.4%. “Even as agriculture exports have been impacted by policy decisions to restrict exports of wheat and rice, they have grown 27.5% in the financial year to date FY23. The terms of trade are now turning with non-food inflation moderating,” Morgan Stanley said. An increase in hiring in the informal sector and more employment opportunities in the semi-skilled space will also help improve rural household incomes, as per the report. Normalised activity will also boost monetary transfers from urban to rural areas - and give a much-needed fillip to the rural economy. Moreover, rural wages – both farm and non-farm — have shown an improvement in August. “Rural wages are steady in nominal terms and probably at trough in real terms,” the report said. Structurally speaking Apart from the cyclical outlook, the structural outlook of rural areas is improving as well – thanks to policymakers’ focus on boosting rural incomes. Apart from improving agricultural productivity, they are building infrastructure, industry and services along with skill-building of the rural labour force. “Progress has already been made in physical infrastructure, connectivity and digital infrastructure, and we expect policymakers to continue to focus on boosting productivity across the rural economy,” the report said. While government spending in rural areas has reduced since the start of the pandemic, it’s still at 3.3% of the GDP — well above the pre-pandemic levels. However, Morgan Stanley also insists that there are risks associated with their assumptions on <keyword id="9592296" type="General" weightage="20" keywordseo="Rural-recovery" source="Orion">rural recovery</keyword>. They include slower-than-expected improvement in contact-intensive services segment growth, weak job creation in the semi-skilled segment, and an increase in commodity prices — which will increase non-food inflation and worsen terms of trade for the rural sector. Monsoons: Scarcity plus surplus The biggest drag however is the patchy monsoon this year. While rainfall was 6% above last year’s rainfall, as much as 40% of the total area received excess rainfall and six regions (17% of total) in the north and north-eastern parts of the country recorded a deficit. As per the full-season data, decline in kharif acreage touched 0.8% year-on-year as the deficit in rice sowing – a key summer crop – remains steady at 4.8%. Sowing declined the most for rice, followed by pulses and oilseeds. “The first advance estimates show rice production likely to be 6.8mn tons lower than in 2021. We will continue to monitor the government's measures to regulate the supply and demand balance in this area through procurement and other actions. Separately, the reservoir level is at 108% of the 2021 level, which is likely to support the winter cropping season,” the report said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/two-in-three-ceos-in-india-expect-a-recession-in-12-months-says-survey/articleshow/94934951.cms">Two in three CEOs in India expect a recession in 12 months says survey</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/indians-above-40-are-feeling-younger-healthier-than-gen-z-millennials-report/articleshow/94918231.cms">Indians above 40 are feeling younger &amp; healthier than Gen Z, millennials - report</a>

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High food prices raise concerns but improved monsoon offers hope for RBI: SBI report

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As Indian stock indices hit their peaks, analysts worry about high valuations

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Rice, cereal sowing suffers due to delayed monsoons drenching hopes of moderating food prices

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Monsoon to advance in various parts of India this week; Delhi to see thunderstorms

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Rural recovery underway says Morgan Stanley

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