Indices rally over 1% on hopes of good Monsoon

Benchmark stock indices jumped over 1% on Monday as expectation of a good monsoon prompted traders to cover short positions. It is expected that La Nina condition will take over and will perhaps favour a good monsoon this year, a PTI report said.

Hints of further stimulus from the Bank of Japan and rise in European equities also aided sentiment. A better monsoon along with implementation of The 7th Pay Commission should provide impetus to consumption and market going ahead, said Sanjeev Prasad, co-head, institutional equities, at Kotak Institutional Equities.

A normal monsoon would be a shot in the arm for the market as deficient rainfall in the last two years has suppressed demand and corporate earnings.

The Nifty gained 116.20 points, or 1.5%, to end at 7,671.40, while the Sensex rallied 348.32 points to close at 25,022.16. In Nifty April futures, open interest fell 2%, indicating short covering, but analysts said some addition of long positions were also seen.

Provisional data showed both FIIs and DIIs were net buyers of shares worth Rs 107.23 crore and Rs 303.88 crore, respectively .

Amid the broad-based rally , telecom stocks led the gains amid news that Bharti Airtel will acquire Aircel's 4G spectrum in 8 circles. While Airtel gained 4%, Idea Cellular surged 5% too.

Triggers on the legislative and earnings front are expected to guide the market in the near term.

“On the legislative side, some positive activity is possible in the second half of the Budget session.Starting with the March quarter, earnings will start looking good on a YoY basis,“ Prasad said.

Jigar Shah, head of research at Kim Eng Securities also expects earnings to show improvement in the March quarter.