Markets are riding high in early trade on increased hopes of an improving economy as was made evident on Monday with the pick-up in the momentum of core sector growth to a 16-month high in March 2016.
At 9:40 AM, the BSE Sensex was trading 167 points up or by 0.6% at 25,602 points, while the NSE’s Nifty index was also up 0.6% or 52 points at 7,858.
The early rally is being led by Adani Ports (up 2.7%), Tata Motors (up 2.4%), Larsen & Toubro (up 1.7%), HDFC (up 1.5%).
The growth in the core sector was backed mainly by electricity, cement, refinery products and fertilisers, even as growth of coal output fell and crude oil and natural gas slipped back into contraction.
Ratings agency ICRA said that the slowdown in coal output notwithstanding, adequate inventories supported a robust about 16% growth of thermal electricity generation in March 2016. Moreover, the plant load factor was maintained at 65%. “The moderation in the growth of coal output as well as the contraction in crude oil and natural gas would weigh upon mining output growth in March 2016. Nevertheless, a favourable base effect as well as pickup in the pace of expansion of the core sector and automobile production augur well for a mild improvement in IIP growth in March 2016. The electricity sector likely remained a key engine of industrial growth in March 2016, similar to the trend in February 2016,” said ICRA.