The equity benchmark indices rebounded from early losses to trade higher on Thursday, tracking firm global cues and easing inflation data that lifted investor sentiment.
After opening on a weak note, the Sensex slipped 138.36 points, or 0.16 percent, to 84,328.15 in early trade. The broader Nifty declined 38.50 points or 0.15 percent to 25,837.30.
However, both indices later recovered from the day’s low, with the Sensex gaining 435.38 points or 0.52 percent to 84,901.89, while the broader Nifty reclaimed the 26,000 mark at around 1:45 p.m. for the first time since October 30.
Asian Paints, InterGlobe Aviation, ICICI Bank, Jio Financial Services and Tata Steel were among the top gainers in the Nifty50 pack, rising about 4 percent.
Key reasons behind market rise
1) Hopes of December RBI rate cut: Investor sentiment improved following a sharp fall in retail inflation to a record low of 0.25 percent in October, raising expectations of a possible rate cut by the RBI’s Monetary Policy Committee in December. The decline came after reductions in GST rates on nearly 380 mass consumption items and subdued food prices.
Retail inflation, measured by the Consumer Price Index (CPI), was 1.44 percent in September and 6.21 percent in October 2024. The October reading is the lowest since the current CPI series, with 2012 as the base year, began in January 2014.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, "The decline in October retail inflation in India to 0.25 percent indicates the possibility of a rate cut from the MPC in December. However, weak monetary policy transmission remains a challenge for the RBI."
A Reuters poll also showed that about 80 percent of economists expect the U.S. Federal Reserve to cut interest rates by 25 basis points next month to support a slowing labour market.
2) Firm global cues: Asian markets were largely trading higher, with Shanghai’s SSE Composite Index and Japan’s Nikkei 225 posting gains. U.S. stocks ended higher in overnight trade on Wednesday, providing further support to domestic equities.
3) Crude oil decline: Brent crude, the global oil benchmark, eased 0.13 percent to USD 62.63 per barrel. A decline in crude prices is generally positive for the Indian economy as it helps ease inflationary pressures.
4) India VIX down: The India VIX, a measure of market volatility, extended its decline for the second straight session to 11.92. A lower VIX typically indicates reduced investor fear.
5) Likely NDA win in Bihar: Markets took support from exit polls indicating a likely win for the ruling National Democratic Alliance (NDA) in Bihar, which boosted investor confidence.
Technical view
Anand James, Chief Market Strategist at Geojit Financial Services, said, “The doji formed yesterday after entering our target region of 25,850–25,980 hints at indecision, warranting caution. However, oscillators remain accommodative towards a larger rise, aiming for 26,130–26,550. The day’s upside momentum could, however, be challenged if early dips fail to hold above 25,840. We will wait for a fall below 25,630 to switch sides.”
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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