Sensex, Nifty touch new closing highs on monsoon optimism
BULL RUN Prospects of a stable govt and good monsoon forecast driving stocks
MUMBAI: Indian stocks rose, with key indices ending at a record high, after the weather department forecast a near-normal rainfall this year and investors anticipated that companies would report upbeat quarterly earnings.
The benchmark BSE Sensex gained 369.80 points, or 0.95%, to 39,275.64, while the National Stock Exchange’s Nifty index advanced 0.83% to 11,787.15 on Tuesday.
Prospects of a stable government and good monsoon are driving stocks, analysts said. Investors are also anticipating further interest rate cuts by the Reserve Bank of India (RBI) and expect consumption demand to revive after election results are announced on May 23.
Prime Minister Narendra Modi is seeking a second term for his government in the ongoing national elections amid plunging crop prices and widespread anger among farmers. Well-distributed rainfall during the monsoon will improve crop output and income of farmers and boost rural consumption—critical for consumer goods companies and twowheeler makers.
“A better monsoon outlook from the Met department provided relief to investors who are also keenly watching earnings to accumulate quality stocks despite election-related volatility,” said Vinod Nair, head of research, Geojit Financial Services Ltd.
The India Meteorological Department (IMD) predicted rainfall activity is likely to be 96% of the 50-year average. IMD expects weak El Niño conditions to prevail during the later part of the season but with reduced intensity. Skymet expects “below normal” monsoon, citing El Niño risks.
MUMBAI: Indian stocks rose, with key indices ending at a record high, after the weather department forecast a near-normal rainfall this year and investors anticipated that companies would report upbeat quarterly earnings.
The benchmark BSE Sensex gained 369.80 points, or 0.95%, to 39,275.64, while the National Stock Exchange’s Nifty index advanced 0.83% to 11,787.15 on Tuesday.
Prospects of a stable government and good monsoon are driving stocks, analysts said. Investors are also anticipating further interest rate cuts by the Reserve Bank of India (RBI) and expect consumption demand to revive after election results are announced on May 23.
Prime Minister Narendra Modi is seeking a second term for his government in the ongoing national elections amid plunging crop prices and widespread anger among farmers. Well-distributed rainfall during the monsoon will improve crop output and income of farmers and boost rural consumption—critical for consumer goods companies and twowheeler makers.
“A better monsoon outlook from the Met department provided relief to investors who are also keenly watching earnings to accumulate quality stocks despite election-related volatility,” said Vinod Nair, head of research, Geojit Financial Services Ltd.
The India Meteorological Department (IMD) predicted rainfall activity is likely to be 96% of the 50-year average. IMD expects weak El Niño conditions to prevail during the later part of the season but with reduced intensity. El Niño is usually unfavourable for rainfall in India. IMD’S June forecast will, however, be more critical. Private weather forecaster Skymet expects “below normal” monsoon, citing El Niño risks.
Bank of America Merrill Lynch said IMD’S monsoon forecast supports the brokerage’s call that the central bank will cut rates by 25 basis points to 5.75% on June 7, given the dovish speech by RBI governor Shaktikanta Das at the International Monetary Fund on Friday.
“We will review the possibility of the RBI cutting again on August 6 after the Met’s second early-june rainfall forecast. We continue to see 2019 as a year of lending rate cuts favouring rate sensitives. Near normal rains also typically boost rural demand. A somewhat good crop usually arms the farmer with pricing power as he/she does not have to face either a glut, or, sell in distress to meet minimum expenses,” the brokerage said in a April 15 note.
Private-sector lender ICICI Bank was the biggest boost, climbing 3.6% to a record close amid reports that Goldman Sachs raised its target price to ₹492 from ₹451.
Indusind Bank Ltd, up 3.8%, was the top gainer in percentage terms. Meanwhile, IT services firm Wipro Ltd ended 2.4% lower after it said it was investigating a potential breach of some of its employee accounts due to an advanced phishing campaign. The company also declared its fourth-quarter results.
Global crude oil benchmark Brent futures fell 0.11% to $71.10 per barrel. The Indian rupee meanwhile weakened by 18 paise to close at 69.60 against the US dollar on Tuesday amid strengthening of the American currency and high crude oil prices.
THE BSE SENSEX CLOSED AT 39,275.64 POINTS, WHILE THE BROADER NSE NIFTY SETTLED AT 11,787.15 POINTS ON TUESDAY