‘We may have a terrible year ahead’: Zerodha’s Nithin Kamath warns of El Nino risks

Zerodha founder and CEO Nithin Kamath on Monday warned that India could face a difficult year if a developing El Niño weakens the monsoon while elevated oil prices continue to pressure the economy.

He said 2026 was shaping up to be a period of multiple economic challenges converging at the same time. “2026 is turning out to be a case of when it rains, it pours,” he wrote in a detailed post on X.

Kamath pointed to forecasts of a possible super El Niño in the Pacific Ocean, saying the weather phenomenon has historically been associated with weaker monsoons in India.

“Every few years, the Pacific Ocean warms up abnormally, and that phenomenon is called El Niño. When it happens, India’s monsoon weakens. This year, it looks like a super El Niño is developing, and the IMD is already forecasting rainfall 6% below normal for 2026,” he said.

He argued that even a modest rainfall shortfall could have significant consequences because the monsoon remains critical to India’s agriculture sector. “It may not sound like much, but remember, 70% of India’s annual rainfall comes from the monsoon, and 60% of farmers depend entirely on it,” Kamath said.

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Drawing on historical data, he noted that India has frequently experienced below-average rainfall during El Niño years.

“If history is any guide, we may have a terrible year ahead. In 60% of El Niño years since 1951, India has seen below-average rain. In 2009, rainfall fell to just 78% of normal, the worst in 37 years,” he wrote.

Kamath said a weak monsoon could hurt agricultural output and push up food prices, adding to existing inflationary pressures. “A weak monsoon means weaker harvests, and weaker harvests mean higher food prices and higher inflation. Food is one of the biggest expenses in a household budget,” he said.

He also linked the risks to disruptions in global energy markets stemming from the closure of the Strait of Hormuz. “This is now layering on top of the unholy mess created by the closure of the Strait of Hormuz,” Kamath wrote.

The Hormuz disruption has affected a key global energy corridor through which a significant share of the world’s oil and liquefied natural gas trade passes. “India imports 80 to 90% of its oil and 40 to 50% of its gas, and we are already seeing steady price hikes and WFH advisories going out around the world,” he said.

Kamath noted that the Indian crude basket averaged $114 a barrel in April and $106 in May, levels he described as well above comfortable levels. 

He warned that simultaneous increases in food and energy prices could force policymakers to respond.

“When food and energy prices rise together, the RBI cannot stay quiet. Beyond a point, it will have to start hiking rates, and that is when a bad situation starts to feel like a crisis,” Kamath said.

He ended his note with a reminder that the year is still in its early stages. “It’s still May.”