Sensex and Nifty opened higher on February 13 as investors weighed domestic inflation data hinting at another rate cut, even as U.S. inflation concerns cast a shadow over risk appetite. The benchmarks had been on a losing streak, closing in the red for six straight sessions amid disappointing Q3 earnings, escalating U.S. tariff tensions, and persistent FII outflows. However, financials, auto, and healthcare stocks led the rebound in Nifty today.
At 10.25 AM, the Sensex was up 356 points or 0.5 percent at 76,527, and the Nifty was up 109 points or 0.5 percent at 23,154. About 2,246 shares advanced, 963 shares declined, and 121 shares were unchanged. Despite the uptick, the Nifty remains 12 percent below its all-time high reached in September.
"The RBI governor recently cut rates, citing a decline in January prices. However, I believe this rate cut was more of a signaling move, and I don't expect another cut soon unless there's a significant slowdown in India's growth momentum," said Market Veteran, Sunil Subramaniam.
India's retail inflation cooled to a five-month low of 4.3 percent in January, down from 5.2 percent in December, largely due to easing food prices. This bolstered hopes of further monetary easing from the Reserve Bank of India. However, a hotter-than-expected U.S. inflation print tempered those expectations.
Domestic inflation data, released just hours before the U.S. inflation print, initially fueled hopes of further monetary easing by India's central bank. However, the unexpectedly strong U.S. inflation reading quickly dampened those expectations.
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U.S. consumer prices jumped 0.5 percent in January, pushing the annual inflation rate to 3 percent, up from 2.9 percent in December. Fed Chair Jerome Powell's comments to the House Financial Services Committee made it clear that the central bank's fight against inflation is far from over, dimming hopes of near-term rate cuts.
The data sent shockwaves through global markets—U.S. equities ended lower, the dollar strengthened, and Treasury yields spiked. Higher U.S. interest rates typically dampen foreign investor interest in emerging markets like India. So far in February, foreign outflows from Indian equities have reached Rs 22,098 crore.
Speaking before the House Financial Services Committee, Federal Reserve Chair Jerome Powell emphasised that the data underscored the ongoing fight against rising prices. He indicated that any further rate cuts would be off the table until there's clear evidence of inflation returning to the Fed's 2 percent target.
Meanwhile, trade war jitters added to the market's woes. U.S. President Donald Trump vowed to impose reciprocal tariffs on nations charging duties on U.S. imports, just as Indian Prime Minister Narendra Modi was set to visit the White House. This raises the stakes, given ongoing U.S. complaints about India's high tariffs.
"We might see some positivity from Prime Minister Modi's visit to the US, depending on potential benefits to specific sectors," Subramaniam said.
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Despite the market volatility, he sees a silver lining. "Domestic institutional investors (DIIs) are likely to drive the next market direction, particularly in the broader market. FIIs will continue to focus on large-caps, but a broader recovery will depend on DIIs finding value opportunities."
Looking ahead, Subramaniam sees the April earnings season as the next major catalyst. "Until then, we can expect stock-specific action from DIIs. A broader buying trend will likely depend on positive economic data supporting the recovery narrative set by the budget and RBI policies," he added.
In the broader market, the BSE Midcap rose 0.2 percent, while the BSE Smallcap gained 0.4 percent, though the smallcap index remains nearly 19 percent below its record high.
Tata Steel, Bajaj Finserv, Bajaj Finance, and Cipla led Nifty's gainers, each rising 2-3 percent, while Infosys, Adani Enterprises, Tata Consumer, TCS, and Hero MotoCorp were the biggest losers, falling 0.2-0.5 percent.
NATCO Pharma shares plunged 17 percent after reporting a 37 perent drop in net profit for Q3 FY25.
Global cues remain mixed. While U.S. markets ended lower, Asia-Pacific stocks traded higher, choosing to defy Wall Street's pessimism.
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