NEW DELHI: India’s equity market is expected to surge after the US equity market rose sharply early Wednesday as key inflation data showed a better-than-expected slowdown in rising prices. The Dow Jones Industrial Average jumped over 500 points, or roughly 1.6% while the S&P 500 gained 1.7% and hit its highest level since early May. The Nasdaq Composite also rose more than 2%.
“US inflation data indicates improvements though the quantum is small directional fall provides big relief and lowers the probability of recession ahead. This would support the global economy, and so do equity markets. Indian equity markets would certainly appreciate the data and would continue its ongoing positive trend for some time now,” said Mitul Shah, Head of Research, Reliance Securities.
With increased foreign fund inflow, easing commodity prices and a less hawkish stance by the US Federal Reserve when it comes to future rate hikes, India’s equity market has seen a sharp rebound in the last month. On Wednesday, the benchmark indices - Sensex and Nifty - closed at 58,817 and 17,535, respectively, and are now in close vicinity of their all-time high.
“Sustained fall in commodity prices has led to inflation fears receding and this could end the rate hiking cycle soon. The US Dollar may have peaked and may start to correct easing pressure on other currencies. Strong data coming out of the US have dampened the fears of recession,” said Deepak Jasani, Head of Retail Research, HDFC Securities.