Markets surge on monsoon, rate-cut hopes; Sensex soars 363 points

Benchmark indices closed higher for second straight session supported by broadbased rally among the frontliners on anticipation that RBI may slash the key policy rate in the upcoming monetary policy review on June 2, 2015.

Further, well-timed monsoon forecast and slowdown in foreign funds outflow also lifted sentiments.The 30-share Sensex ended 363 points higher at 27,687 and the 50-share Nifty gained 111 points to close at 8,374.
 

In the broader market, both the BSE Midcap and Smallcap indices, ended up nearly 1% each and performed in line with the large counterparts. Market breadth on the BSE ended firm with 1,671 advances against 1,051 declines. 

MARKET VIEW

According to K.Subramanyam, co-head equity advisory at Altamount Capital, markets are likely to be volatile going ahead. "Based on an expectation of a rate cut on June 2, the market is moving up. Levels of 8,450 could be the immediate target. However, it may be difficult to sustain beyond that. Profit taking could be considered at higher levels," he said.

Adds Alex Mathews, Head Research, Geojit BNP Paribas Financial Services: "The markets remained in positive zone, and buying was seen in the heavy weight stocks on the expectations that there will be timely monsoon and of possible interest rate cut early next month during the RBI policy meet. Also Nifty crossing above its 200 DMA provided strong support to the markets."

KEY STOCKS

On the sectoral front, all sectoral indices barring BSE Realty index ended the session in the positive territory with  BSE FMCG, Healthcare, Bankex, Oil & Gas, Consumer Durables and Power indices gaining between 1-2.5%.

Shares of Dr Reddy’s Laboratories soared over 3.5% after the drug maker announced the launch of Somazina, an innovator brand of Citicoline in the Indian market.

Bharti Airtel gained over 1.5% on BSE after the company said that it has received financing commitments of up to $2.5 billion from China Development Bank and Industrial and Commercial Bank of China.

Tata Power, Tata Steel, Bajaj Auto and ITC, SBI ended higher between 0.5-3.5% ahead of the quarterly earnings due later during the week. However, Coal India ended 0.3%  lower on caution ahead of the quarterly results due  later during the week. 

The oil marketing companies such as Bharat Petroleum Corporation (BPCL), Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation (HPCL) ended higher between 2%-4% on the back of fuel price hike. These three companies announced a Rs 3.13-a-litre increase in the retail price of petrol and Rs 2.71-a-litre rise in diesel prices with effect from Friday midnight to align the de-regulated domestic prices with the international rates. 

Further, oil exploration majors ONGC and RIL gained 1% and 1.7% each and GAIL finished the session higher by 3%.

A little over 150 million new shares of Tata Motors started trading at National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) with effect from today. The stock ended the session with marginal gains.

Financials and auto stocks continued their upward march on hopes that RBI Governor Raghuram Rajan will cut interest rates to revive growth. HDFC twins, Axis Bank, ICICI Bank, SBI, Bajaj Auto, Maruti Suzuki, M&M ended between 0.5-2.5% higher.

The consumer durables surged on hopes of an uptick in demand. From this pack, Blue Star, Whirlpool, PC Jeweller, Titan and Videocon surged between 1-4%.

GLOBAL MARKETS

European shares rose on Monday, with energy stocks in focus after a rise in oil prices, while the dollar lifted off four-month lows it had reached on concern over the US economy. Britain's FTSE 100 index, which includes several heavyweight mining stocks, was up 0.5%.

Asian shares had earlier fallen as investors fretted that weak US data on Friday suggested growth was slowing in the world's largest economy, though the US S&P 500 index ended last week at a record closing high. MSCI's index of Asia-Pacific shares, excluding Japan, fell 0.7%, though Tokyo's Nikkei closed 0.8% higher.