Indian shares rose for a second consecutive session on Tuesday, led by companies with big rural sales such as Hero MotoCorp, which gained after the country's only private weather forecaster said 2016 monsoon rains were likely to be above average.
The India Meteorological Department has also projected an above normal monsoon for 2016, spelling good news for farmers and policymakers battling two years of consecutive drought.
Dealers said widening of positions by participants ahead of key economic data — industrial production (IIP) for February and consumer price index (CPI) for March — to be released after market closing today also influenced the trading sentiment.
The 30-share BSE index Sensex was up 123.43 points or 0.49 per cent at 25,145.59 and the 50-share NSE index Nifty was up 37.55 points or 0.49 per cent at 7,708.95.
Among BSE sectoral indices, auto index gained the most by 1.61 per cent, followed by oil & gas 1.21 per cent, healthcare 1.00 per cent and infrastructure 0.94 per cent. Only metal index was down 1.38 per cent.
Major Sensex gainers were GAIL (+3.87%), Maruti (+2.82%), Hero MotoCorp (+2.47%), Tata Motors (+2.4%), and Adani Ports (+1.92%), while the top five losers were Coal India (-2.28%), Tata Steel (-2.11%), ITC (-1.18%), HDFC Bank (-0.55%) and State Bank of India (-0.24%).
Monsoon rains
Monsoon rains are expected to be 105 per cent above a long-term average, with a 35 per cent probability of above average rainfall, Skymet had said in a statement on Monday. State-run India Meteorological Department is expected to issue its forecast later in the day.
Above average monsoon rains play a key role in boosting the demand for an array of consumer goods, as 70 per cent of India's 1.3 billion people live in villages.
However, broader gains were capped as companies geared up to report earnings. Among major companies, software services provider Infosys is due to report its results on Friday.
“Market is taking monsoon forecast news positively but the important trigger will be the earnings report and global cues," said Daljeet Singh Kohli, head of research at India Nivesh Securities.
“At the moment, there are no positive triggers that could drive markets upwards, so we could see a range-bound trend between 7,500 to 8,000 on Nifty.”
Stocks in focus
Agriculture-related stocks jumped on better-than-normal monsoon forecast. Jain Irrigation Systems rose 6 per cent, while Insecticides (India) Ltd soared 17 per cent.
Hopes of revival in rural demand also boosted two-wheeler maker Hero MotoCorp and consumer goods firm Hindustan Unilever .
Jewellery makers, including Tribhovandas Bhimji Zaveri , rose after they re-opened shops following nearly six weeks of protest.
Nestle India shares surged after the company said on Monday all 29 samples of Maggi noodles tested clear by government test lab Central Food Technological Research Institute.
Tata Steel shares were down on concerns over the company's pension liabilities in UK after it agreed to sell one of its plants there to Greybull Capital.
A report by SMC Global said: "Asian stocks rose, led by Japanese equities as the yen retreated after a seven-day rally amid the start of the US earnings season. US stocks slipped at the start of a first-quarter earnings season that is expected to paint a bleak picture of corporate profits.Overall bank lending in Japan was up 2.0 per cent on year in March, the Bank of Japan said - coming in at 498.333 trillion yen. That follows the 2.2 per cent increase in February. Excluding trusts, bank lending climbed an annual 2.0 per cent to 433.346 trillion yen - slowing from the 2.2 per cent gain in the previous month. Lending from trusts climbed 2.3 per cent to 64.987 trillion yen, while lending from foreign banks slipped 1.2 per cent to 1.954 trillion yen."
Global markets
European shares edged higher on Tuesday, helped by gains among miners and banking stocks, but luxury goods companies were among the worst performers after a disappointing update at LVMH.
The pan-European FTSEurofirst 300 index and the euro zone's blue-chip Euro STOXX 50 index were up 0.3 per cent and 0.5 per cent, respectively by 0954 GMT.
Asian stocks rose on Tuesday, led by a rebound in Japanese stocks, while commodities such as crude oil stood tall thanks to a sagging dollar.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent.
Wall Street had closed slightly lower on Monday, with gains in materials and banks countered by declines in consumer staples shares, as investors girded for the start of an earnings season expected to be gloomy.
Equities gave up gains late in the day with the three major indexes finishing in negative territory after posting losses last week.