For a country where 60% of the population depends on agricultural income, and where agriculture contributes 18% to India’s GDP, the timely arrival and widespread distribution of the monsoon can have a far-reaching impact on the economy. It will also influence the fortunes of sectors that are heavily dependent on rural income.

The monsoon, which provides 70% of India’s annual rainfall, also has the power to influence central bank decisions and shape the direction of the Indian stock market. In this context, India’s 2025 monsoon season has commenced notably early, with the southwest monsoon arriving eight days ahead of the typical onset date of June 1—marking the earliest onset in 16 years, according to the India Meteorological Department (IMD).

Following this early arrival, the IMD has forecast above-normal rainfall of at least 108% of the long-period average (LPA) in June 2025. This points to a potentially strong agricultural season—crucial for rural demand—and could benefit sectors such as agrochemicals, fertilizers, tractors, two-wheelers, and FMCG, all of which are closely tied to agricultural performance and rural incomes.

Ample monsoon rainfall is also expected to boost hydropower generation and replenish large reservoirs. Moreover, nearly half of India’s farmland, which lacks irrigation coverage, relies heavily on the June–September monsoon rains.

The above-normal monsoon is also likely to ease inflation further. Inflation has already been on a downward trend over the past three months, hitting a six-year low in April. This could give the Reserve Bank of India more room to adopt a softer stance on interest rates—potentially lifting consumption demand, especially in urban India.

Favorable rain outlook triggers optimism in fertilizer, FMCG, and tractor plays

Amid expectations of an above-normal monsoon in 2025, brokerage firm Way2Wealth has identified eight stocks that are well-positioned to benefit from a robust rural and agricultural recovery.

These monsoon picks span sectors that are directly or indirectly influenced by rainfall trends and rural demand. The brokerage has picked Bayer CropScience from the agrochemicals sector with a target price of ₹6,450 apiece, and Coromandel International from the fertilizers and crop protection segment, setting a target price of ₹2,700.

It has also given a ‘buy’ rating to Godrej Agrovet, with a target of ₹840. In the tractor segment, Swaraj Engines has been chosen by the brokerage, while in the two-wheeler space, it has picked Hero MotoCorp, expecting both to benefit from rural demand tailwinds. The target prices for Swaraj Engines and Hero MotoCorp are set at ₹4,600 and ₹5,000, respectively.

In the FMCG space, the brokerage has preferred Emami, assigning a target price of ₹660, as it believes the company could gain from increased rural FMCG spending. Supreme Industries, which may benefit from higher demand for irrigation and rural infrastructure, has been given a target price of ₹4,750.

Way2Wealth has also included Canara Bank in its list, setting a target of ₹125 apiece, citing the potential for increased rural credit demand.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.