Fertiliser, Seed, and Tractor Stocks Plummet Up to 3% on Weak Monsoon Forecast

India's Monsoon Forecast Revision Triggers Selloff in Fertiliser and Agri-Linked Stocks

The Indian government's revised forecast for the June-September monsoon season, which predicts cumulative rainfall at 90 percent of the long-term average, down from 92 percent estimated in April, has triggered a selloff in fertiliser and agriculture-linked stocks. The weaker rainfall prediction has raised concerns over crop output, rural incomes, and demand for agricultural inputs.

Shares of fertiliser, seed, and tractor-linked companies such as Fertilisers and Chemicals Travancore (FACT), Kaveri Seed Company, Eicher Motors, and others fell up to 3 percent on Friday. The sell-off was led by fertiliser stocks, with FACT emerging as one of the biggest losers, falling 3.4 percent to Rs 891.8 in afternoon trade. National Fertilizers Ltd (NFL) declined 2.8 percent to Rs 75.9, while Rashtriya Chemicals & Fertilizers (RCF) dropped 2.6 percent to Rs 129.2. Chambal Fertilisers and Chemicals slipped about 1 percent to Rs 473.4.

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The weakness was also visible in other agriculture-linked counters. Kaveri Seed Company fell 3.3 percent to Rs 870.1 as investors assessed the potential impact of lower rainfall on sowing activity and seed demand during the upcoming kharif season. Tractor and farm-equipment manufacturers also traded lower. Escorts Kubota, one of India's leading tractor makers, declined around 1 percent to Rs 2,851.2. Eicher Motors fell nearly 3 percent to Rs 7,205.5, adding to the broader weakness across rural-focused stocks.

A normal or above-normal monsoon generally supports farm incomes, boosts acreage under cultivation, and improves demand for fertilisers, seeds, tractors, two-wheelers, and other rural consumption categories. Conversely, concerns over deficient rainfall often trigger caution toward stocks with significant exposure to agricultural activity.

According to the revised forecast, central India, northwestern India, and southern peninsular regions are likely to receive below-normal rainfall during the season, while northeast India is expected to see normal precipitation. The weather department also said the latest climate models indicate that El Niño conditions could develop during the rainy period. The lower rainfall outlook comes at a time when policymakers are already grappling with concerns over food inflation. Economists have warned that weaker monsoon rains could affect agricultural output and place upward pressure on prices of key food commodities in the months ahead. Investors are also monitoring the potential impact on demand for fertilisers and crop nutrients.