Economic Data Brings Cheer; Sensex Climbs 250 Points

(RTTNews) - The Indian markets rallied on Monday as a trio of positive economic reports spurred optimism about domestic growth and paved the way for another interest rate cut as early as September 29, when the Reserve Bank of India (RBI) is scheduled to come out with its monetary policy review.

Official figures released on Friday showed that India's industrial output grew by 4.2 percent in July from a year earlier, exceeding expectations for 3.6 percent growth, buoyed by a decent expansion in manufacturing. The current account deficit narrowed to 1.2 percent of GDP in the June quarter, aided by a decline in merchandise imports and higher earnings from services exports.

Another report released today showed that deflationary trend continued for the 10th month in a row with the Wholesale Price Index-based inflation plunging to a historic low of (-) 4.95 percent in August on cheaper fuel and vegetables. The August reading was substantially lower than the (-) 4.05 percent recorded in July due to a global deflationary trend in commodity prices.

The consumer price (CPI) data is slated for release later in the day and economists expect the index to come in between 3.3 percent and 3.6 percent, much lower than RBI's forecast of around 4 percent.

The rupee traded strong at 66.36 against the dollar in the afternoon as the U.S. dollar weakened broadly, heading into the Federal Reserve's crucial meeting on Thursday. With global markets still in turmoil from China's downturn and inflation pressures remaining benign, analysts are still split regarding whether the Fed will end its seven-year-old policy of zero interest rates.

The benchmark index BSE Sensex climbed 246.49 points or 0.96 percent to 25,856.70, while the broader Nifty index closed up 82.95 points or 1.06 percent at 7,872.25.

Among the top gainers, Yes Bank, Bank of Baroda, Axis Bank, Tata Power, Tata Steel, Hindalco, BPCL and Vedanta climbed 3-4 percent. L&T Finance Holdings rallied 4.6 percent on a report that Boston-based alternative asset manager Bain Capital is set to acquire a 15-20 percent stake in the company.

Rolta India gained 3.6 percent and Siemens advanced 1.8 percent on winning new orders. Venkys (India) shares were locked at the 20 percent upper circuit limit after its board recommended a 1:2 bonus issue.

Amtek Auto soared 12.9 percent on reports the auto component manufacturer is considering selling its non-core assets to cut debt. Just Dial jumped 13.1 percent as it launched a new android mobile application to provide a one-stop online solution for a variety of user requirements.

Among those that fell, telecom major Idea Cellular lost 1.1 percent and energy explorer Cairn India retreated 1.5 percent. JK Tyre & Industries dropped 1.9 percent after it agreed to acquire a tyre manufacturing unit from BK Birla's Kesoram Industries for Rs 2,200 crore.

Global cues were lackluster, with the Asian markets ending Monday's session on a mixed note, weighed down by weak Chinese data and amid anxiety ahead of the conclusion of the Bank of Japan's two-day policy meeting on Tuesday and the Fed's decision on Thursday, while European stocks were moderately higher in early trade.

China's Shanghai Composite index closed down 85.44 points or 2.67 percent at 3,114.80 as disappointing industrial output and fixed-asset investment figures heightened concerns about the health of the world's second-largest economy.