Timely monsoon forecast aids Sensex, rate-cut hopes

MUMBAI (Reuters) - The BSE Sensex rose on Monday, on track for its second consecutive session of gains, as blue-chips rose after forecast of a timely monsoon raised hopes the Reserve Bank of India (RBI) would lower interest rates in June.

India's weather office said on Thursday it expects monsoon rains to hit the southern Kerala coast around May 30, a timely arrival for farmers worried about dry weather from an El Nino weather pattern this year.

Value buying was also seen in beaten down stocks. Indian stock market has become one of the worst performing markets among Asian equities in 2015 so far due to the slow pace of reforms and concerns around retrospective taxation of foreign investors.

 

Also, the government on Thursday defended its approach to reforms, days after it succumbed to political pressure in parliament and delayed the passage of key land and tax reforms, a move that has tarnished Prime Minister Narendra Modi's first year in office.

"This year monsoon is more important as last year it failed," said G. Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.

Agriculture crop prices may jump if the monsoon is delayed and rate easing cycle will be pushed back, he added.

The benchmark BSE Sensex rose 0.34 percent, while the broader Nifty gained 0.4 percent.

Options on the Nifty indicate the index would move between 8,000 to 8,500 in May, according to Thomson Reuters calculations.

Blue-chip stocks led the gainers. ITC rose 1 percent, while Reliance Industries gained 0.8 percent.

ICICI Bank and HDFC Bank rose 0.8 percent each

Drug makers also rose. Dr.Reddy's Laboratories gained 2.5 percent, while Lupin advanced 2.3 percent.

($1 = 63.9200 rupees)

(Reporting by Abhishek Vishnoi; Editing by Anand Basu)