Indian stocks rose for a seventh straight day of trading, as the monsoon progressed better than forecast. That led to hopes that the Reserve Bank might cut rates further in near future.
The S&P BSE Sensex soared 385 points or 1.41 percent, and the Nifty was up 119.85 points or 1.45 percent at 2 pm. Major contributors to the gain were Axis Bank and HDFC Bank, followed by Coal India and Tata Steel, which rose after news that employees in its United Kingdom subsidiary have called off a planned strike. Bharti Airtel, Wipro, Reliance and ONGC were among the laggard stocks.
This is the Sensex's longest stretch of gains in the last four months. The tide turned last week, when the Sensex gained 3.4 percent after three weeks of declines. Reserve Bank governor Raghuram Rajan cut rates for a third time in June, but had also said that future paring of policy rates was uncertain and depended on the performance of the monsoon and the government's response in case rains were inadequate. That led traders to sell off big time.
But the monsoon has been above normal so far — 78 percent of the country has received excess or normal rain — leading to a mood of higher optimism which is reflected in the rise in stocks. "Most of the parameters that the market was worried about seem to be falling into place," said Brahmaprakash Singh, chief investment officer at Pramerica Asset Managers in a TV interview. The June-September monsoon accounts for more than seventy percent of total rainfall in a year.
The Greek crisis had also impacted markets adversely, and there was better news on that front as well. The country's Prime Minister Alexis Tsipras has presented a new plan to avoid default before an emergency summit later today.
Positive corporate developments also helped. Tata Motors rose on news that it has sold 3,000 GenX Nanos in the first month of launch, higher than average sales of 1,400 Nanos last year. Indiabulls Real Estate jumped 27 percent after co-founder and chairman Sameer Gehlaut said he will invest Rs 538 crore in the company, and raise his stake to 37 percent, ten percentage points higher than the existing level.