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Indian shares jumped more than 2 per cent on Wednesday to post their best gain in nearly three months, as companies with big rural sales rose after a private weather forecaster predicted more monsoon rains than initially estimated.
Moreover, positive global cues and covering-up of pending short positions by speculators in view of tomorrow’s May monthly expiry in the derivatives segment contributed to the rally.
Domestic sentiment was also buoyed as Morgan Stanley has upgraded Indian equities to “overweight” from “equalweight’’.
The 30-share BSE index Sensex ended higher by 575.70 points or 2.28 per cent at 25,881.17 and the 50-share NSE index Nifty ended up by 186.05 points or 2.4 per cent at 7,934.90.
Both the indexes posted their best percentage gain since March 1.
All BSE sectoral indices ended in the green. Among them, banking index gained the most by 3.17 per cent, followed by capital goods 2.96 per cent, IT 2.25 per cent and TECk 2.21 per cent.
Major Sensex gainers were ICICI Bank (+4.48%), BHEL (+4.34%), L&T (+4.02%), Bajaj Auto (+3.96%) and Maruti (+3.47%), while the only loser was Cipla (-4.97%).
Agriculture-related stocks jumped on better monsoon expectations. Jain Irrigation Systems rose 1.6 per cent, while Insecticides (India) Ltd gained 3.65 per cent.
Hopes of revival in rural demand also boosted consumer goods firm Hindustan Unilever and two-wheeler maker Hero MotoCorp, which gained 1.63 per cent and 0.92 per cent, respectively.
Tech Mahindra jumped 10.3 per cent after the software services provider on Tuesday posted a 90 per cent surge in consolidated March-quarter profit, beating analysts' estimates, aided by higher other income and lower taxes.
Tata Power Co Ltd rose 1.95 per cent, gaining for the second straight session after the company on Monday posted stellar fourth-quarter results.
However, Cipla declined 4.97 per cent after India's fifth-largest drugmaker by sales on Tuesday reported a 69 percent fall in its quarterly profit, well below analysts' forecasts
Monsoon rains
Monsoon rains are expected to be 109 per cent above the long-term average, compared with its earlier estimate of 105 percent, Skymet had said on Tuesday, adding that the June monsoon rains were seen at 87 per cent of long-period average.
Above-average monsoon plays a key role in boosting demand for an array of consumer goods, as 70 per cent of India's 1.3 billion people live in villages.
Global market sentiment was upbeat as investors cheered strong US new home sales data for April, which supported the view the economy may be strong enough for the Fed to raise interest rates as early as June.
“Global cues are definitely supporting and on top of that Skymet came out with the market commentary and raised its monsoon forecast, which is adding to the positive sentiment," said Vivek Mahajan, head of research, Aditya Birla Money.
Global markets
A report by SMC Global said: "Asian stocks rose, with the regional equities benchmark gauge rebounding from a seven-week low, after a surge in US home sales fuelled speculation the world’s biggest economy can withstand higher interest rates. US stocks surged to close higher Tuesday as a rally in financial and technology shares underpinned a sharp, broadly based stock-market advance. US new home sales surged up by 16.6 per cent to an annual rate of 619,000 in April from a revised 531,000 in March. Economists had expected new home sales to climb by 2.3 per cent to a rate of 523,000 from the 511,000 originally reported for the previous month. With the much bigger than expected increase, new home sales reached their highest level since hitting 627,000 in January of 2008."
Asian shares jumped on Wednesday, taking cues from sharp gains in European and US markets, while the dollar firmed as upbeat US home sales supported the view that the economy may be strong enough for the Federal Reserve to raise interest rates in coming months.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6 per cent, while Japan’s Nikkei surged 1.8 per cent as exporters got a boost from a weaker yen.
Wall Street surged over 1 per cent on Tuesday and the Nasdaq had its strongest day in three months as investors made peace with the possibility that the US Federal Reserve might soon raise interest rates.
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