Sensex crosses 30,200, Nifty hits 9,400 as normal monsoon forecast boosts growth outlook
Indian Meteorological Department (IMD) expect the monsoon could be normal this year, which is expected to give a booster dose to the rural economy.business Updated: May 11, 2017 10:18 IST
Indian share benchmarks Sensex and Nifty closed at record highs on Wednesday as a normal monsoon forecast by the country’s weather office boosted chances of robust corporate earnings and faster economic growth.
The benchmark BSE Sensex ended up 315 points, or 1%, to hit a new high of 30,248.17. The Nifty too touched an all-time high of 9,407.
Bharti Airtel gained 7.9% while Hindustan Unilever was up 4.6%, HDFC 3.2%, M&M 2.6% and Reliance 2.2% and Bajaj Auto 1.7%.
Sentiments got a leg up after data showed that foreign funds, which were largely net sellers on the Indian bourses for some time, made fresh purchases on Tuesday, brokers said.
On Tuesday, the Indian Meteorological Department (IMD) said the monsoon this year could be normal and bring 100% rainfall instead of 96% as predicted earlier, which is expected to give a booster dose to the rural economy.
A heavy shower boosts chances of higher farm output, more money in the hands of farmers and demand for two-wheelers, cars, tractors, electronic gadgets, gold and housing materials.
Last year, robust output of wheat, rice and pulses pushed up India’s foodgrain production 8.7% to a record high 273.38 million tonne during 2016-17, government data showed on Tuesday.
Higher buffer stocks and another bumper crop will enhance farm income this year.
A robust monsoon will also help the economy grow faster in 2017-18. The GDP growth slowed to 7.1% last year from 7.9% in the previous year, due to the demonetisation drive.
Asian markets were trading higher following an overnight positive lead from European and US markets.
Japan’s Nikkei closed up 0.3%, Hong Kong’s Hang Seng was up 0.5% and Singapore’s Straits Times Index 0.4% and Taiwan 0.5%.
Many of global stock indices are at record highs as earnings of growth are estimated at 14.5%, highest since Q3 of FY 2011, according to Thomson Reuters data. What’s heartening is that about 75% of companies are beating analysts’ expectations.
Global investors took comfort from the statement from US commerce secretary Wilbur Ross that indicated the Donald Trump administration would attempt to use existing tools to aggressively enforce trade rules and insist on fairer treatment for US goods, rather than adopt the slash-and-burn approach Trump promoted on the campaign trail in 2016.
Investors are also bracing for another hike in policy interest rates by the Federal Reserve at its next meeting.
Brent crude futures rose more than 0.5% to $49.03 per barrel after Reuters reported Saudi Arabia would cut supplies to the Asia region to maintain supply to meet rising domestic demand for power during the summer months.
OPEC is battling against rising US output that is threatening to derail its attempts to end a sustained global glut in crude.
Gold advanced modestly to $1221.90 ounce, breaking a two-week long losing streak.
(With agency inputs)