The India Meteorological Department on Tuesday predicted a normal monsoon in the country this year – 96% of the long-period average. The favourable forecast was attributed to a weakening El Niño and a strengthening Indian Ocean Dipole. While there are doubts about the intensity of the showers, the IMD predicted a 38% chance of near-normal rainfall and said there were indications that the rains will be well distributed.

Market analysts believe that the IMD forecast will boost investor sentiment as a normal monsoon will bring down inflationary pressures and back agricultural production. “The markets were worried about a deficit monsoon, but the IMD forecast will put that to rest now. Driven by liquidity, the markets will continue to rise...,” Pankaj Pandey, head of research at ICICI Securities Ltd, told Mint.

Godrej Consumer Products’ business head for India and other Saarc nations, Sunil Kataria, helped put in perspective the impact agriculture has on the economy. He told Business Standard: “Rural India is a key driver of fast-moving consumer goods growth, and it depends on the monsoon since it is linked to farm output and income. The projection of a normal rainfall will, therefore, help in driving up rural consumption and accelerate overall growth.”

Although the IMD forecast comes as positive news for Indian markets, which have lost 1% in the past month, geopolitical factors have analysts anxious. These include escalating nuclear tensions with North Korea and the United States’ intervention in Syria and Afghanistan.

The Met Department will release a more detailed forecast on the regional distribution of the rains in early June, when there is more data available on the El Niño and Indian Ocean Dipole, which are phenomenons that affect sea surface temperatures and weather patterns.