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Sensex soars 400 points on key good monsoon forecast

The above normal monsoon forecast and encouraging IIP and CPI boosted markets

Policy Pulse
Publish Date: Apr 13 2016 11:22AM | Updated Date: Apr 13 2016 1:07PM

Sensex soars 400 points on key good monsoon forecast

 Benchmark share indices extended gain in late morning trades on above normal monsoon forecast after two straight years of drought while easing inflation and rebound in industrial output also boosted sentiment.

 
The S&P BSE Sensex surged 432 points to 25,577 and Nifty50 was up 130 points at 7,839. In the broader market, the BSE Midcap and Smallcap indices extended gains and were up 1.3% each. Market breadth was strong with 1632 gainers and 536 losers on the BSE.
 
Bank shares emerged as the top gainers on hopes that credit growth would pick up after data showed a rebound in industrial output in February. ICICI Bank, HDFC, HDFC Bank, SBI and Axis Bank were up 1%-3% each.
 
M&M emerged as the top Sensex gainer up 6% after good monsoon forecast would boost demand for tractors. Among other auto shares, Maruti Suzuki and Tata Motors were up 2% each while Bajaj Auto and Hero MotoCorp were up 0.6%-2% each.
 
Infosys trimmed early gains and was trading with marginal gains. The company will announce its fourth quarter earnings due on Friday, April 15.
 
Wipro extended gains and was up nearly 3%. The company's Board of Directors will meet to consider a proposal for buyback of equity shares of the Company on April 20, 2016.
 
FMCG majors ITC and HUL were up over 1% each on hopes that good monsoon this year would boost volume growth going forward.
 
Bharti Airtel was up over 3%. The telecom major said its mobile commerce subsidiary, Airtel M Commerce Services, had received payments bank licence from the Reserve Bank of India. The company has also entered into an agreement with Aircel to acquire its 2,300-MHz spectrum band in eight circles for Rs 3,500 crore
 
Among other shares, Shares of Kaveri Seed were up nearly 6% after the company announced that it has commenced operations at its new facility located at Molangur Village, Shankarapatnam Mandal, Karimnagar District in the state of Telangana.
 
Markets opened 1% higher on favourable macroeconomic parameters and above normal monsoon forecast. Also, strength among the global peers amid rally in commodity and crude oil prices and mixed bag of earning results in Europe and US are likely to aid sentiment.
 
The S&P BSE Sensex was up 378 points at 25,523 and the Nifty50 was up 116 points at 7,825.
 
Retail inflation measured by the Consumer Price Index (CPI) eased to a six-month low of 4.83% in March from 5.26% in February. Also, India's industrial output rose by 2% in February after falling continuously for three consecutive months, government data showed on Tuesday.
 
After two consecutive droughts, the India Meteorological Department (IMD) on Tuesday said the monsoon this year is expected to be “above normal.” It forecast monsoon at 106 per cent of the Long Period Average (LPA). This is the first time since 1999 that department has made an “above normal” prediction. Monsoon is considered normal if rain during the June to September season is 96-104 per cent of the LPA.
 
In the broader market, the BSE Midcap and Smallcap indices were up 1% each. Market breadth was strong with 1146 gainers and 196 losers on the BSE.
 
Foreign institutional investors were net buyers in equities to the tune of Rs 308 crore, as per provisional stock exchange data.
 
The rupee was trading higher at 66.36 to the US dollar compared to the previous close of 66.43 on the back of strong gains in equities.
 
Except for Hero MotoCorp all other 29 Sensex components were trading with gains.
 
Infosys was up nearly 1% ahead of its fourth quarter earnings due on Friday, April 15. TCS was also up nearly 1%.
 
Wipro was up 3% after the company's Board of Directors will meet to consider a proposal for buyback of equity shares of the Company on April 20, 2016.
 
Tata Motors extended gains and was up 2% amid robust JLR sales.JLR's volumes grew 29 per cent year-on-year, with China sales up 43 per cent (about half came from the China joint venture). Two-wheeler majors Hero MotoCorp, TVS Motor and Bajaj Auto were up 0.6%-2% each.
 
In the financial pack, ICICI Bank, HDFC, HDFC Bank, SBI and Axis Bank were up 1%-3% each.
 
Hero MotoCorp was down 0.1%. Hero MotoCorp failed to exceed its 2014-15 sales as rural demand, 40 per cent of volumes, remained disappointing. The company’s Splendor motorcycle brand was pulled down to second spot, replaced by Honda’s Activa, the country’s biggest two-wheeler brand and the largest selling scooter.
 
Among other shares, Shilpa Medicare rallied 13% to Rs 493 on the BSE in early morning trade after the pharmaceutical company announced that it has received good manufacturing practice (GMP) compliance certificate for two API sites from Pharmaceuticals and Medical Devices Agency (PMDA), Japan.
 
Asian equities are gaining across the board after strong Chinese trade data raised hopes that the economy is stabilizing. Also, rally in commodity and crude oil prices lifted the mood.
 
China reported exports rose 18.7% in yuan terms in March, compared to a year earlier, while imports dipped only a slight 1.7%. That was a huge improvement for the month of February as usually the data at this time of year tends to be distorted by the new year holidays.
 
Brent crude oil prices hit a four-month high on Tuesday after reports of an agreement among two major producers to freeze output, boosting energy stocks, even as the US dollar was having its strongest session in three weeks.
 
US equities ended nearly 1% higher on Tuesday led by energy stocks tracking a rally in crude oil prices while select banks also firmed up ahead of their first quarter earnings this week. Dow Jones industrial average ended up 0.9% at 17,721, the S&P 500 rose 1% to close at 2,062 and the tech-laden Nasdaq ended up 0.8% at 4,872.