Moneycontrol Pro Panorama | Clouds gather on the Street

Dear Reader,

The stock markets may have not given it much importance, but for the agricultural economy, another normal monsoon spells good news for farm income. The IMD has predicted the South West monsoon to yield rainfall between 96-104 percent of the long period average. This is an early forecast and it’s only by July that we get a good idea about the spread and timing of rainfall, both of which are crucial for agriculture. If along with good rainfall, the supply of fertilisers and agro-chemicals improve and prices become more reasonable, then the farm sector may have more reasons to smile. The hope is rural demand will also get support.

In other good news, China’s GDP grew by 4.8 percent in the March quarter, which was better than expected. But along with it comes the caveat that the full effect of the COVID-19 lockdowns in China will hit growth in the current quarter. A slowing economy could spell lower consumer demand, softer industrial activity and in turn affect demand for commodities.

But investors seem to be wearing grey-tinted glasses, with the markets down by over 2 percent at today’s close. Take HDFC Bank’s results for example, analysed by Neha Dave in today’s edition. While the bank’s results showed good growth in advances and healthy asset quality and earnings growth at 23 percent could have been higher but for a provision, investors may have chosen to look at the dip in margins. The stock is down by 4.3 percent. But as she points out, it’s not how earnings perform but how the merger makes progress that’s going to determine how the stock moves. Indeed, the entire financials pack seems to be under the weather. Giving it company are IT companies, with investors apparently fretting about what Infosys’s results mean for the rest of the pack. Do read this analysis by Madhuchanda Dey from last week, published when the markets were closed, which points to near-term weakness in the Infosys stock but analyses why the long-term outlook remains positive.

A small number of stocks in the Nifty were keeping their chin up today. One of them was NTPC. In his piece, R Sree Ram analyses how thermal power is making a strong comeback, especially for those producers who have power purchase agreements and domestic coal linkages signed. Once again, coal shortages threaten to affect power availability even as the desire to end reliance on imported coal is a distant dream. Read to know why NTPC finds itself in a strong position.

Wholesale price inflation data released at noon showed the index for March rising by 14.55 percent over a year ago, up from 13.11 percent in February. Fuel and power was the major contributor to the increase. Markets slipped a bit more after this data was released. The pace of inflation, with retail inflation too at high levels, confirms what a section of the market has been fearing -- the end of accommodative monetary policy is around the corner.

Investors seeking havens must weigh geopolitical risks of China versus US (republished from the FT)

Technical Picks: Thermax, CanFin Homes, Nifty, USD-INR, JSW Steel and Crude oil (These are published every trading day before markets open and can be read on the app)