Equity markets rallied to new highs on Wednesday, with the NSE Nifty scaling 9,400 for the first time as a prediction of good monsoon cheered investors and drove consumer and rural-focused stocks higher.
The BSE Sensex jumped 315 points or 1.1 per cent to close at 30,248.17 points. The Nifty50 index rose 90 points or 1 per cent to end the day at a life high of 9,407.30 points.
Investors were slightly nervous on El Nino possibly impacting monsoon rain this year. However, the Met department on Tuesday said that India is likely to receive a normal monsoon with prospects of 100 per cent rainfall. This boosted market sentiments.
"While the macro improvement has been driving the markets over past few months, fresh monsoon forecast has thrown a positive factor for the markets to move forward," said Vaibhav Agrawal, head of research at Angel Broking.
Consumer stocks were among the major gainers on Wednesday. Hindustan Unilever closed 4.6 per cent higher and ITC too rose 1 per cent. Rural markets account for 35-40 per cent of the total sales of FMCG companies and a good monsoon will drive demand in these markets.
Other companies that derive strong growth in rural markets like Mahindra & Mahindra, the country's largest tractor maker, also rose 2.6 per cent and Hero Motocorp was up 1 per cent.
"The near term outlook remains positive with strong consumption demand, low interest rates and strengthening of rural economy," said Agrawal.
Among other stocks, Bharti Airtel, the country's largest telecom operator surged 7 per cent on strong subscriber addition figures and growth in Africa business, although the overall profits declined in the wake of competition from Reliance Jio.
Tata Motors, Maruti Suzuki, Axis Bank and Cipla were among the other major gainers on Wednesday.
Despite global uncertainties, Indian markets have been resilient this year in the wake of a strong economy and key election wins for the ruling BJP government at the centre in states like Uttar Pradesh, which have attracted huge flows from foreign institutional investors. Domestic fund flows, too, have remained strong.
Corporate earnings announced by several companies so far for the fourth quarter have been better than expected and with a wider earnings recovery expected over the current financial year, analysts say markets could rally further, despite near-term valuations looking some what expensive.
