Markets give up gains; worries of deficient monsoon weigh

REUTERS - India's stock markets gave up early gains and were largely flat on Monday as expectations of strong economic data due later in the day were outweighed by concerns that the monsoon could be deficient this year.

India's gross domestic product (GDP) is expected to have grown 7.4 percent in April-June, a Reuters poll showed, just below 7.5 percent in January-March. The data is expected to show that India will remain the fastest growing major economy for a second straight quarter.

Investors are hopeful that upbeat data will give the Reserve Bank of India enough ammunition to cut interest rates at its next policy meeting on Sept. 29.

However, investors and policy makers are also keeping a close eye on the progress of the monsoon as a strengthening El Nino weather pattern is likely to trim rainfalls in August-September, raising fears of the first drought in six years.

"I don't think this optimism will sustain at higher levels because global volatility is likely to shoot up," said Alex Mathews, head of research at Geojit BNP Paribas.

The benchmark BSE Sensex was up 0.14 percent and the broader Nifty rose 0.21 percent, on track for their worst monthly performance since May 2012.

Pharma stocks led gains, with Sun Pharma up 1.8 percent, Lupin 3.5 percent and Dr Reddy's 1.37 percent higher.

ONGC rose 1.37 percent and BPCL 2 percent on lower crude oil prices.

Coal India climbed 1 percent.

Cement stocks Ultratech and ACC fell 1.7 percent and 1.6 percent, respectively while telecom major Bharti Airtel slipped 2.6 percent.

(Reporting by Karen Rebelo in Mumbai; Editing by Subhranshu Sahu)