Sensex rises as monsoon progress brings in hope

REUTERS - Indian shares rose on Tuesday as the good progress of monsoon rains lifted consumer goods makers such as Hindustan Unilever that depend on the rural economy, though trading volumes were thin due to continued concerns about the Brexit fallout.

Hopes India will see above-average south-west monsoon rains after two years of drought have bolstered optimism about the domestic economy, helping offset some of the global volatility tied to Britain's vote to leave the European Union last week.

Stronger rains, besides benefiting the key rural sector, could also cool down food prices, raising the prospect that the Reserve Bank of India would be more willing to cut interest rates again later this year.

"The monsoon is progressing well, and that is something which is more positive for us," said Neeraj Dewan, director at Quantum Securities Pvt Ltd.

"People are now waiting to see how things span out and progress in the UK to react further based on that news."

The Nifty was up 0.57 percent at 8,140.80 as of 0749 GMT, while the Sensex was 0.65 percent higher at 26,575.25, after they posted marginal gains in the previous session.

Shares of ITC Ltd were up 2.35 percent, after hitting their highest since February 2015 earlier in the session, while Hindustan Unilever rose 2.46 percent.

Both stocks, which were among the top gainers on the Nifty 50, accounted for nearly half of the gains on the index.

Tata Communications Ltd gained as much as 7.99 percent after the company said it would sell its South-African fixed-line unit Neotel to Liquid Telecom Group.

Idea Cellular Ltd rose 4.78 percent to its highest in over two weeks, after the company management reiterated confidence in its execution strategy and ability to gain market share, in an analyst meet on Monday.

Among the top losers, software services companies extended falls due to their hefty exposure to Europe.

Tata Consultancy Services fell 0.84 percent, after declining 6.44 percent in the previous three sessions. Infosys Ltd was down 0.50 percent, while HCL Technologies Ltd fell 1.75 percent.

(Reporting by Darshana Sankararaman in Bengaluru; Editing by Subhranshu Sahu)