Key benchmark indices extended initial gains and hit fresh intraday high in morning trade as firmness in Asian stocks and good prospects of monsoon rains boosted sentiment. At 10:20 IST, the barometer index, the S&P BSE Sensex was up 131.42 points or 0.42% at 31,321.98. The Nifty 50 index was up 32.80 points or 0.34% at 9,669.95.
FMCG stocks gained after government weather forecaster in its latest forecast further raised amount of seasonal rainfall to be received this year. Telecom stocks also gained on renewed buying.
The S&P BSE Mid-Cap index rose 0.52%. The S&P BSE Small-Cap index advanced 0.89%. Both these indices outperformed the Sensex.
The broad market depicted strength. There were more than two gainers against every loser on BSE. 1,360 shares rose and 618 shares fell. A total of 95 shares were unchanged.
FMCG stocks gained after a government weather forecaster in its latest forecast further raised amount of seasonal rainfall to be received this year. Tata Global Beverages (up 0.36%), Marico (up 1.51%), Britannia Industries (up 0.76%), Jyothy Laboratories (up 0.75%), Procter & Gamble Hygiene and Health Care (up 0.56%), Hindustan Unilever (HUL) (up 0.25%), Dabur India (up 0.35%), Colgate Palmolive India (up 1.47%), GlaxoSmithkline Consumer Healthcare (up 0.37%), Godrej Consumer Products (up 0.81%), and Bajaj Corp (up 0.54%) gained. Nestle India fell 0.2. FMCG firms derive substantial revenue from rural India.
Telecom stocks also gained on renewed buying. Bharti Airtel (up 1.19%), Tata Teleservices (Maharashtra) (up 6.08%) and Idea Cellular (up 0.44%) gained.
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Reliance Communications (RCom) fell 2.99% after Moody's and Fitch yesterday, 6 June 2017, cut RCom's rating for the second time in a week, even as the telco received a seven-month respite from bankers on debt repayment.
Moody's Investors Service cut its rating to Ca from Caa1. The new rating suggests that the debt is highly speculative and likely in, or very near, default, with some prospect of recovery of principal and interest. It had downgraded RCom to Caa1, indicating high risk, on 30 May 2017.
Fitch Ratings lowered RCom's rating to RD from CCC, saying the situation constituted restricted default, as multiple waivers or forbearance periods have been extended in parallel following a non-payment event. Fitch last cut RCom's rating on 2 June 2017.
Shares of Bharti Infratel fell 0.17%. Bharti Infratel is a provider of tower and related infrastructure and is a unit of Bharti Airtel.
Adani Power rose 1.47% after the company said that its board approved a proposal to hive off its flagship Mundra power generating business undertaking, generating 4620 megawatts (MW) of power, to its subsidiary company, namely, Adani Power (Mundra).
The transaction will put Mundra undertaking at par with the other operating subsidiaries of the company, with specific strategic focus as well as specific financial arrangements. The announcement was made after market hours yesterday, 6 June 2017.
Meanwhile, the second stage forecast of Southwest monsoon seasonal rainfall was issued by Indian Meteorological Department (IMD) in New Delhi yesterday, 6 June 2017. IMD has forecast that quantitatively, the monsoon seasonal rainfall for the country as a whole is likely to be 98% of the long period average (LPA) with an error of 4%. The forecast was 2 percentage points higher than the April forecast. The monsoon delivers about 70% of India's annual rainfall, critical for the farm sector. In April, the IMD had forecast this year's monsoon rains at 96% of the 50-year average of 89 centimetres.
Investors will closely watch the Reserve Bank of India's (RBI) monetary policy review scheduled today, 7 June 2017. The central bank is widely expected to keep policy rates unchanged.
Overseas, most Asian stocks rose although investors remained noticeably risk averse ahead of several major political and economic events later this week.
US stocks closed lower yesterday, 6 June 2017 for a second session as investors exercised caution ahead of the UK elections and political uncertainties over former Federal Bureau of Investigation director James Comey's testimony this week.
British Prime Minister Theresa May looks on course to increase her parliamentary majority in Thursday's election, an opinion poll showed, shortly after another survey suggested the race with the opposition Labour Party was neck and neck. European Central Bank policy meeting is also due tomorrow, 8 June 2017.
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