Sensex climbs 161 points as monsoon progresses

Indian stocks advanced for a second day on optimism above-average monsoon rain may improve the odds for further monetary policy easing.

Sun Pharmaceutical Industries, India's most valuable drugmaker, was the best performer on the BSE Sensex.

Reliance Industries, owner of the world's largest refining complex, rose for the second day. Bajaj Auto and Mahindra & Mahindra, a tractor maker, advanced at least two per cent.

Housing Development Finance Corp climbed to a one-week high.

The Sensex closed higher 161.25 points, or 0.6 per cent, at 26,586.55.

Rainfall since June 1 has been 11 per cent above normal, the weather office said on Monday. The monsoon and its impact on food costs will be key to further rate cuts, the central bank said on June 2 after cutting rates for a third time this year.

"The progress of the monsoon has eased some concerns," Alex Mathews, the head of research at Geojit BNP Paribas Financial Services, said by phone from Kollam, Kerala. "The positive macroeconomic data on consumer inflation and industrial production are also supporting the market."

Official data on Friday showed consumer prices rose 5.01 per cent in May from a year ago, after a 4.87 per cent increase in April. A separate report the same day showed industrial production grew 4.1 per cent in March compared with an estimated 1.5 per cent increase.

The wholesale inflation rate declined less than estimated, data showed Monday. Wholesale prices fell 2.36 percent in May from a year earlier after a 2.65 per cent decline in April, the government said. The median of 31 estimates in a Bloomberg survey had been for a 2.5 per cent drop.

Monsoon expectations
The monsoon accounts for more than 70 per cent of India's total rainfall. About 77 per cent of the country has received excess or normal rain since June 1, the weather office. The government on June 2 cut its estimate of June to September monsoon rains to 88 per cent of the 50-year average, from 93 percent in April.

Sun Pharmaceutical rallied three per cent, the most since April 6 and Reliance Industries gained 1.3 per cent. Bajaj Auto rose two percent, while Mahindra & Mahindra added 2.3 per cent. Housing Development Finance climbed to its highest level since June 4.

International investors sold a net $91.5 million of Indian stocks on Thursday, June 11, paring this year's inflows to $6.6 billion, data compiled by Bloomberg show.

The Sensex has dropped 3.3 per cent this year and trades at 14.7 times the projected 12-month profits, compared with the five-year average of 14.3.

The MSCI Emerging Markets Index is valued at a multiple of 11.8.