Where Do We Actually Stand?
Episode 1 explained what El Niño is. Now the practical question: with the 2026 monsoon underway, how concerned should an investor be? Here is the scorecard, read plainly.
El Niño is forming, the monsoon has arrived, and the headlines are loud. So here's the only question worth asking as an investor: is this shaping into a 2015-style problem, or a lot of noise? The honest answer today — it's genuinely too early to call, but we can read the scorecard as it stands.
Rather than guess, let's look at the four dials that actually decide how an El Niño year lands for Indian markets — the forecast, the rains so far, the water in the tank, and the inflation cushion — and mark each one honestly.
The season has started steadily. The real test comes later — and the buffers are thinner than the calm headlines suggest.
Reading the four dials
This is where things actually stand as of June 2026. Each dial is sourced from official data — and where it points to comfort, we say so; where it points to risk, we say that too.
Read together, these four don't say "disaster" and they don't say "all clear." They say a below-normal season is the base case, and the shock absorbers are only partly charged. That's the picture, plainly.
The season's opening weeks
The monsoon reached Kerala on 4 June — three days later than the usual 1 June, and nine days after the IMD's own forecast date. A late start grabs attention, but history is clear that a delayed onset over Kerala doesn't reliably predict the full season.
Since then the advance has been brisk: by the second week of June it had covered the entire northeast, all of Sikkim, and pushed into north Bengal, with the rain line moving up through the peninsula. So far, so steady. The catch is timing — and that's the part most people miss.
An El Niño usually strengthens as summer goes on. June and July can look fine on leftover atmospheric moisture, which is exactly why a good start is no guarantee. The numbers that matter most won't be in until August and September.
The buffers, only partly charged
The reassuring version of this story says "India has full reservoirs and low inflation, so relax." The accurate version is more mixed — and as a research desk, we'd rather you have the accurate one.
(seasonal low)
(but rising)
Reservoir storage: low, and uneven
National reservoir storage slid from about 57% of capacity in early March to roughly 39% by end-April, and on to about a third (≈34%) by late May — and it kept drawing down through the pre-monsoon heat into June. That is the normal seasonal trough, but a thin one. The headline figure also hides the real story: that ~34% is an average, and the pockets that matter most are sitting well below it.
Mumbai: low, and still drawing down
The clearest live example is the city itself. The seven lakes that supply Mumbai were running at roughly 13–14% of capacity in the second week of June — about 13.6% on 6 June, slipping from 15.6% on 1 June as the catchments waited for rain — and the civic body has run a 10% water cut since mid-May to stretch supply into mid-August, with one of the seven lakes (Upper Vaitarna) already drawn down to empty. Encouragingly, that is still a touch better than the same week in 2024 and 2025, so this is tightness, not yet crisis. The monsoon reached Mumbai only around 10–12 June, so the refill was just beginning as of the 10th — how quickly the lakes recover from here is now a real-time read on the season.
Across Maharashtra: tankers, and dwindling wells
Inland, the strain is sharper. Across Maharashtra, the state was running roughly 700-plus water tankers across some 15 districts through May — supplying several hundred villages and well over a thousand hamlets — with the drought-prone Marathwada belt among the hardest hit and the count climbing through the pre-monsoon weeks. When surface storage runs this low, the fallback is the well: districts take over private wells and drill new borewells to feed the tankers — Thane alone had commissioned around 110 borewells by early June — which quietly draws down the same groundwater the coming crop will need. It is the identical squeeze, one layer below the reservoirs.
The north is still awaiting the rains
Further north, much of the kharif heartland is simply outside the monsoon's reach so far — by mid-June the rain front had only worked through the south and northeast, leaving the northern and central plains to a hot, dry wait. That matters more here than almost anywhere, because these plains lean heavily on groundwater rather than rivers, and that water table is already among the most over-drawn on Earth. A weak refill there doesn't just leave reservoirs low — it lands on a well system that has been depleting, year after year, for decades.
Inflation: low, but no longer falling
Here the buffer is more real, if shrinking. Headline retail inflation was 3.48% in April with food at 4.20%, and May is tracking near 4% — close to the RBI's target, and nowhere near the 6%-plus of past crisis years. But it's rising, not easing, nudged up by vegetables, fuel and a weaker rupee. The cushion exists; it's just getting thinner.
India is better defended than in 2015 — but "better defended" isn't "fully defended." A weak Aug–Sep would land on reservoirs that are low and an inflation rate that's already drifting up. That's why this season deserves attention, not complacency.
No counterbalance this year
In 1997, a super El Niño hit — yet India's monsoon finished near normal. The reason was the Indian Ocean Dipole, the Indian Ocean's own temperature see-saw. In its "positive" phase, it pulls moisture back towards India and partly cancels an El Niño's drag. It's the safety net that has bailed India out before.
The catch for 2026: the IMD expects the Dipole to stay neutral through the season. A positive phase may only develop near the very end of the monsoon — too late to help the crucial Aug–Sept window. In plain terms, the 1997-style rescue is largely off the table, and the El Niño has a clearer run than in years when the Dipole leaned in. That's the single most important nuance in this year's outlook.
The honest read: with no Dipole rescue in the forecast, the balance of risk leans toward a shortfall rather than a 1997-style escape. That's not a forecast of disaster — the season can still surprise — but it does mean the right move is to watch the data as it comes and stay ready to act, which is what the rest of this series is built around.
The bottom line, today
As of June 2026: the monsoon has started steadily but late, the official forecast leans below normal, the odds of a deficient season have risen, the reservoirs are low, and the inflation cushion is real but thinning. None of that is a crisis — and none of it is "all clear" either.
The single most useful thing to hold in your head is the calendar. June and July tell you little; August and September tell you almost everything. Until then, the right posture is informed patience — knowing which of your holdings are exposed, and to what. That's where this series goes next.
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Disclosures
This note is issued by Front Wave Research LLP, a SEBI-registered Research Analyst (Reg. INH000018407). Type of registration: Non-Individual. Calls and upside or downside are as at the publication date, not live. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, enlistment of RA with Exchange and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Past performance is not indicative of future results. Investors must perform their own due diligence before acting on any recommendations. Read the full disclosures here.