Mumbai: Indian shares climbed nearly 1% on Tuesday, led by software majors and financials, with improved rainfall and firm world equities boosting sentiment.
Financials topped the gainers, on expectations that loan demand would pick up in the world’s second-fastest growing major economy after China.
Investors shrugged off concerns of a likely hawkish stance by the central bank at its policy review on 27 July.
The Reserve Bank of India is likely to raise interest rates again in its quarterly review on 27 July, topping up its last Friday’s quarter-point rate hike to contain inflationary pressure, a Reuters poll showed.
The 30-share BSE index rose 0.99% or 173.04 points to 17,614.48, with 25 of its components logging gains.
Annual monsoon rains, vital to India’s trillion-dollar economy, have covered the vast country after a sluggish spell, a top weather official said, boosting the outlook for farm products and rural income.
The June-September rains advanced into the key grain-producing states of Punjab and Haryana, narrowing the shortfall since 1 June to 13% from 16% earlier.
“The news on monsoon is definitely a positive. It brings respite after the drought we saw last year,” said Arun Kejriwal, director of research firm KRIS.
“Global cues also helped today. Now, the June-quarter numbers (earnings) should provide further direction.”
Edelweiss expects June-quarter earnings growth for Sensex to come at 6.1 percent on a year-on-year basis.
“Although on a year-on-year basis, growth is expected to be strong for some sectors, there seems to be some softening in earnings growth trajectory,” the Mumbai-based brokerage said in a note on Monday.
Foreign funds have invested a net of $6.8 billion in Indian equities so far in 2010, with primary market offerings absorbing a share. The main index is up 0.9 percent so far this year.
The funds had poured in a record $17.5 billion in 2009, which had fuelled a spectacular rally of 81 percent.
Leading lender State Bank of India gained 1.8% while private-sector rivals ICICI Bank and HDFC Bank climbed 2.1% and 2.4% respectively.
Expectations of revenue growth for the June quarter pushed up export-focused outsourcing firms.
Kotak Securities said it expects 5.2% to 6.7% constant currency revenue growth for the tier-1 IT companies for the June quarter.
Sector leader Tata Consultancy Services rose 2.5% while smaller rivals Infosys Technologies and Wipro climbed 1.6% each.
Metal makers rallied as base metals climbed with copper rising to a one-week high.
Non-ferrous metals producer Sterlite Industries firmed 1.6% while aluminium maker Hindalco rose 1.5%.
Tata Steel, world’s eighth largest steelmaker by output, gained 1.8%.
Energy major Reliance Industries, which has the highest weight on the main index, climbed 0.5% to Rs1,072.60.
In the broader market, gainers led losers in a ratio of 1.3:1 in a relatively lower volume of 383 million shares.
The 50-share NSE index gained 1% to 5,289.05 points.