Sensex Posts Biggest 1-Day Rally In Nearly Three Months, Surges 576 Points

Hopes of better monsoon rains and a global rally in equities helped the BSE Sensex post its biggest one-day rally in nearly three months. The Sensex closed 576 points or 2.3 per cent higher at 25,881, while the Nifty advanced 186 points to close at 7,935. 

Traders linked the rally to Tuesday's rainfall prediction by private weather forecaster Skymet, which said monsoon rains are expected to be 109 per cent above the long-term average, compared with its earlier estimate of 105 per cent.

Above-average monsoon plays a key role in boosting demand for an array of consumer goods, as 70 per cent of the country's 1.3 billion people live in villages.

Agriculture-related stocks jumped, with Jain Irrigation Systems rising 1.5 per cent, while Insecticides (India) gained 2 per cent. Hopes of revival in rural demand also boosted consumer goods firm Hindustan Unilever and two-wheeler maker Hero MotoCorp, which gained 2 per cent and 1 per cent respectively.

Domestic stock markets were supported by gains in global markets, where sentiment was upbeat as investors cheered strong US new home sales data for April, which supported the view the economy may be strong enough for the Fed to raise interest rates as early as June.

"Global cues are definitely supporting and on top of that Skymet came out with the market commentary and raised its monsoon forecast, which is adding to the positive sentiment," said Vivek Mahajan, head of research, Aditya Birla Money.

Tech Mahindra closed 10 per cent higher after the IT major on Tuesday posted a 90 per cent surge in consolidated March-quarter profit, beating analysts' estimates.

Tata Power rose 2 per cent, gaining for the second straight session after the company on Monday posted stellar fourth-quarter results.

However, Cipla declined 5 per cent after India's fifth-largest drugmaker by sales on Tuesday reported a 69 per cent fall in its quarterly profit, well below analysts' forecasts.