Cooling CPI lifts Sensex, while Nifty inches towards 25,200; pharma, auto stocks zoom

Nifty 50 and Sensex snapped a four session falling streak on July 15.

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26 Aug, 2025 12:21

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Dalal Street staged a minor recovery in trade on Tuesday, July 15, to snap a four-session losing streak as cooling retail inflation spurred bets that the Reserve Bank of India might trim the key benchmark lending rate further.

At close, the Sensex was up 317.45 points or 0.39 percent at 82,570.91, and the Nifty was up 113.50 points or 0.45 percent at 25,195.80. About 2354 shares advanced, 1301 shares declined, and 119 shares remained unchanged.

Most sectoral indices traded in the green, with auto, pharma, and healthcare gauges jumping over one percent each. The sole outliers were the metal and private bank indices, which were marginally in the red.

The broader market outperformed the frontlines, indicating rising investor interest at the broader end of the spectrum, with the Nifty Midcap 100 rallying 0.8 percent while the Nifty Smallcap 100 gained almost one percent.

As consumer price inflation (CPI) eased to 2.1 percent for the month of June, touching 78-month lows on the back of falling food prices, investors turned bullish. As retail inflation continues to moderate, led by degrowing vegetable prices, according to experts, the Reserve Bank of India will proceed cautiously amid strong downside risks to its inflation and growth estimates for FY2026, noted analysts.

According to experts, this positive surprise, coupled with near-term visibility on lower inflation, might prompt the RBI to lower its inflation forecast for the full financial year, even below three percent.

Japan-based Nomura noted that it expects credit growth to remain subdued and see downside risks to the RBI's FY26 forecasts for GDP growth (6.5 percent) and inflation (3.7 percent). Nomura also  trimmed its headline inflation forecast to 2.8 percent from 3.3 percent, well below the RBI’s forecast of 3.7 percent.

So far, the domestic market is in a state of drift with no clear indications of a sharp change of course. "FIIs who have been net buyers in April, May and June have turned net sellers in July as per the latest data. This has put pressure on large-caps. Absence of institutional selling in the broader market is keeping this segment resilient despite the elevated valuations," noted VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

Alongside selling in the cash market FIIs have increased shorts in the derivative market. Short covering can lead to sharp recovery in the market. But there are no apparent triggers in sight that can lead to short covering.

"The 25,000 mark now serves as a critical support—if breached, it could lead to further downside toward 24,700. On the upside, immediate resistance lies at 25,200, with a strong hurdle between 25,378 and 25,500. A breakout above this zone is needed to re-establish bullish momentum," said  Hardik Matalia, Derivative Analyst - Research at Choice Equity Broking.