Sensex closes 486 points higher, Nifty above 8,050; L&T soars 14%

Mumbai: Stocks gained for the third straight day on Thursday, with BSE’s 30-share Sensex closing 1.88%, or 485.51 points, up at 26,366.68 points and National Stock Exchange’s 50-share Nifty closing 1.7%, or 134.75 points, up at 8,069.65 points.

The last time Nifty touched the 8,000-mark was on 6 November 2015, and the last time it closed above that mark was 4 November 2015. In the last three days, Sensex has gained 4.5%, or 1,136.32 points, while the Nifty has gained 4.38%, or 338.60 points.

Earlier in the day, Sensex rose as much as 2%, or 517.77 points, to 26,398.94 points, a level last seen on 6 November 2015, while Nifty rose as much as 1.87%, or 148.1 points, to 8,083, a level last tested on 4 November 2015.

Larsen and Toubro Ltd, a constituent of Nifty and Sensex, rose close to 14%, pulling up the benchmark indices. Shares of the company, often seen as a proxy for the broader economy, gained after its fourth quarter consolidated sales and profit beat analysts expectations. The company announced its results after market hours on Wednesday.

The improvement in corporate earnings, forecast of a strong monsoon and technical factors such as the expiry of May derivatives have driven gains over the past two sessions.

Andrew Holland, chief executive at Ambit Investment Advisors Pvt. Ltd said India’s economic growth is “slowly but surely” picking up and corporate earnings, excluding banks, are showing improvement.

“Global volatility has eased for the past few days. The Street is a little less worried about a Fed rate hike in June-July. If the monsoon in India is good which is what the forecasts are saying, the markets will move higher with forward earnings being priced in. The reverse may happen if the monsoons are bad. So, we will have to weave our way through,” said Holland.

Twelve out of 22, or 55%, of Sensex companies that have posted March quarter results so far have beaten or matched estimates. That compares with 53% in the December quarter and 57% in the period ended September, Bloomberg data showed.

Private weather forecasting company, Skymet Weather Services Pvt. Ltd expects showers in the June-September season at 109% of the long-term average of about 89 centimeters (35 inches). This is higher than its earlier forecast of 105% in April as well as 106% forecast by the state-owned India Meteorological Department (IMD).

State Bank of India (SBI), the country’s largest lender by assets, rose 4.91%, followed by private sector lenders Axis Bank Ltd (+3.35%) and ICICI Bank Ltd (+2.67%). SBI will report earnings on Friday.

GAIL India Ltd rose for a third day after its net income beat analysts’ forecasts, while Bajaj Auto Ltd had its steepest two-day climb in six weeks. State-run explorer Oil and Natural Gas Corp. Ltd gained 3.09% after the company reported better-than-expected earnings.

On Wednesday, Morgan Stanley raised its rating on India to “overweight” from “equalweight” citing supportive macroeconomic factors such as easing inflation and expectations of further rate cuts by the Reserve Bank of India (RBI), a strong monsoon and inexpensive valuations.

“Nifty opened with a strong upside gap and maintained the pace higher. The rise was supported by a strong close above all near term resistances. The next resistance is seen at 8,100 levels while support levels are seen at 7860 and 7800,” said Mitesh Dalal, director and chief investment strategist, Standard Chartered Securities (India) Ltd, in a client note.

Globally, steady crude oil prices also boosted investor confidence. Most major Asian markets gained on Thursday with indices in Japan, China, Singapore and Thailand ending up to 0.5% higher, Bloomberg data showed. In the European region, major indices in the UK, Germany, and France were trading up by 0.5%. US indices closed higher by 1% on Wednesday.