Markets rally for the third day in a row; Sensex reclaims 25,600-mark

The local equity markets rallied for the third day in a row on Wednesday, as data showing easing inflation and forecast for an above-average monsoon rains sparked hopes for the economic growth and for more rate cuts by the Reserve Bank of India. Besides, strength among the global peers amid rally in commodity and crude oil prices on reports of Russia-Saudi Arabia agreement to freeze output, further buoyed sentiment. On the macroeconomic front, India’s industrial production expanded at 2% year-on-year in February after staying negative for the last three months on better performance of mining, power and consumer goods, while retail inflation in March fell to a six-month low of 4.83% on account of cheaper food articles such as vegetables and pulses.

On the global front, all the major Asian equity indices finished in the positive terrain as strong trade data from China and news of a deal between Russia and Saudi Arabia to limit oil output injected much-needed optimism. The renewed confidence also saw the safe-haven yen retreat against the dollar, having soared more than five per cent since the start of the month. European markets too mirrored the sanguine Asian cues as France's CAC, Germany's DAX and Britain's FTSE traded with strong gains of over a percent. Meanwhile, the trading for US stock index futures pointed to an upbeat start to Wall Street trade on Wednesday, ahead of the earnings from the first Dow component in the earnings season.

Back home, the benchmark got off to a rollicking opening as investors rejoiced an above normal monsoon forecast after two straight years of drought, while easing inflation and rebound in industrial output also boosted sentiment. The frontline indices soon gathered momentum and traded with over a percent gains through the morning session of trade. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs. Eventually the NSE’s 50-share broadly followed index Nifty, convalesced by close to two percent to settle above the crucial 7,850 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex accumulated over four hundred and fifty points and closed above the psychological 25,600 mark. The broader markets however underperformed their larger peers by a big margin as the BSE’s midcap index went home with gains of 0.91%, while the smallcap index climbed 1.06% points.

On the BSE sectoral space, hefty across the board buying was seen, as not even a single sectoral index went home in the negative territory. Investors piled up hefty positions in Auto counter which rocketed by over three and half percent as good monsoons are likely to improve the rural sentiments leading to demand revival in tractors and two-wheelers, while the Banking index too showed some good gains. The high beta sectors like - Metal, and Realty too soared in the session. The market breadth remained optimistic as there were 1591 shares on the gaining side against 1091 shares on the losing side while 160 shares remained unchanged.

Finally, the BSE Sensex surged 481.16 points or 1.91% to 25626.75, while the CNX Nifty rallied 141.50 points or 1.84% to 7,850.45.

The BSE Sensex touched a high and a low 25671.50 and 25358.42, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.91%, while Small cap index gained 1.06%

The top gaining sectoral indices on the BSE were Auto up by 3.59%, Bankex up by 2.56%, Metal up by 2.14%, FMCG up by 1.86% and Realty up by 1.69%, while there were no losers on the BSE sectoral space.

The top gainers on the Sensex were Mahindra & Mahindra up by 7.40%, ICICI Bank up by 5.40%, Bajaj Auto up by 4.95%, BHEL up by 4.88% and Maruti Suzuki up by 4.42%. On the flip side, Infosys down by 0.87% and Adani Ports &Special down by 0.11% were the only losers.

Meanwhile, the India Meteorological Department (IMD) has predicted that the country will receive  'above normal' monsoon this year with a fair distribution of rainfall across major parts of country, easing fears over farm and economic growth after two consecutive years of drought and said that it will be a “good year”.

Releasing its first monsoon forecast for the season, IMD Director General Laxman Singh Rathore said that the monsoon seasonal rainfall will be 106 per cent of the Long Period Average (LPA) with a model error of plus or minus 5 per cent. There is 94 percent probability that monsoon will be normal to excess this year. By and large, there will be fair distribution of monsoon across the country. Drought-hit Marathwada is also likely to receive good rainfall. However, North-East India and South-East India, particularly Tamil Nadu, may get slightly less than normal rainfall.

IMD has further predicted that the four monsoon months from June to September will have more than normal rainfall, which is likely to peak in the later half of the season. At the same time, it also issued a covert warning of floods, which could occur in case of an excess rainfall. The forecast, which comes after two straight years of drought - is likely to boost the farm sector, which has been weighed down by subdued agriculture output and falling farmers' income.

Anything less than 90 percent of the LPA is termed as a 'deficient' monsoon and 90-96 percent of the LPA is considered as 'below normal'. Monsoon is considered as 'normal' if the LPA is between 96-104 percent of the LPA. “Above normal” monsoon is between 104-110 per cent of the LPA and anything beyond 110 per cent of the LPA is considered as “excess”.

The CNX Nifty touched a high and low 7,864.80 and 7,772.20 respectively. 

The top gainers on Nifty were Mahindra & Mahindra up by 7.38%, Bajaj Auto up by 4.97%, ICICI Bank up by 4.96%, Maruti Suzuki up by 4.72% and BHEL up by 4.56%. On the flip side, Zee Entertainment down by 1.72%, Infosys down by 0.57%, HCL Tech down by 0.46%, Adani Ports &Special down by 0.26% and Bharti Infratel down by 0.08% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 88.19 points or 1.41% to 6,330.58, France’s CAC surged 110.71 points or 2.55% to 4,456.62 and Germany’s DAX was up by 231.22 points or 2.37% to 9,992.69.

Asian equity markets ended higher on Wednesday, with sentiment bolstered by a weak yen, an overnight rally in oil prices and upbeat Chinese trade data. Chinese and Hong Kong shares ended higher, as upbeat trade figures out of China coming in before Friday's release of first-quarter GDP data raised hopes that China's slowdown might not be quite as severe as initially feared. While Chinese exports grew 18.7 percent year-over-year in March in yuan terms, the fastest pace of growth since February 2015, the contraction in imports slowed to 1.7 percent, beating expectations by a wide margin after an 8 percent decline in the previous month. Japanese shares hit a fresh 1-1/2 week high as the yen slid from recent peaks against the dollar and Chinese trade data smoothened growth worries. Markets in South Korea were shut for a public holiday.