Indian shares rose more than 1.5 per cent on Monday, marking their biggest daily gain in about 1-1/2 months as rate sensitive stocks advanced on hopes that improvement in monsoon may lead to an earlier-than-expected rate cut by the central bank.
The NSE sub-index for banks rose 2.54 per cent marking its biggest daily gain since May 13.
Indian stocks also extended their gaining streak for a seventh consecutive session as investors snapped up risky assets on optimism that Greece and its international creditors will strike a last-minute deal that will see Athens avert default.
The BSE index gained 1.52 per cent, posting its biggest daily rise since May 8, while the NSE index rose 1.56 per cent, marking its biggest daily gain since May 11.
We look at the reasons that helped stock markets gain today:
The south-west monsoon rains have been 11 per cent above normal so far in June, stoking hopes the Reserve Bank of India will cut rates in October than in 2016 as anticipated earlier after delivering three cuts of 25 basis points each in 2015 so far.
Indian economy optimism
Finance Minister Arun Jaitley statement on credibility of Indian economy being partly restored also gave a boost to the stock markets.
“I think we have to restore back, partly we have, and over the next one-two years, we have to continue to restore the credibility of the Indian economy. It is only then that investors world over are going to feel comfortable. The initial signs are good but I think this is momentum which has to be sustained over a period of time,” he said.
He also said: the world economy is not doing so well and investors are looking for the best place where they can put their money. “And in this they find that India seems to be growing faster.”
Greece deal expectations
Indian markets also gained on optimism that Greece and its international creditors will strike a last-minute deal that will see Athens avert default.
The Asian markets were trading higher with investors encouraged by signs of a compromise in Greece’s debt talks with its creditors, which also affected the mood of the Indian stock markets
Asian shares got the week off to a strong start and US stock futures and the euro firmed on Monday, after Greece scrambled to avert defaulting on its debt with last-minute proposals aimed at appeasing its creditors.
Passage of key land and tax reforms in the monsoon session, upcoming GDP data and June-quarter results were also the key triggers, according to investors and traders.
With inputs from Reuters