NEW DELHI: Domestic equity market made big gains on Wednesday as softer-than-expected inflation readings from India and the US boosted investors’ sentiment. The BSE Sensex surged 742 points, or 1.14%, to end at 65,676 while the NSE Nifty50 index rallied 232 points, or 1.19%, to shut shop at 19,676. With India’s retail inflation, as measured by the Consumer Price Index (CPI), falling to a four-month low of 4.87% in October due to cooling prices of food items, there are expectations that the RBI would change its stance on future interest rates and go for a cut in coming months.
US consumer inflation also cooled in October and slowed to 3.2% on the back of lower gasoline prices and slowing increases in housing costs. This may allow the Federal Reserve to ease key interest rates in the world’s biggest economy.
“The market’s strong gap-up jump in response to positive global cues on account of the softer than anticipated US and UK’s inflation data, highlights the optimism for an end to the interest rate cycle, as evidenced by the ease in bond yields,” said Vinod Nair, Head of Research at Geojit Financial Services.
Nair added that this will likely to draw foreign investment inflows into emerging markets, which is good for India considering the current better earnings season and the festive demand pick-up.
Siddhartha Khemka, head - retail research, Motilal Oswal Financial Services, said the news of fresh stimulus in China and sharp fall in UK’s inflation also boosted the sentiments. “We expect market to maintain its momentum, driven by positive domestic data, cooling off US bond yields and dollar index,” added Khemka.
However, the ongoing conflict in the Middle East between Israel and Hamas continues to pose a risk to the global economy and equity markets. The fear of crude oil prices going up due to the tension in the region continues to impact equities around the world. All sectors participated in the move wherein realty, IT and auto were among the top performers.
The broader indices, midcap and smallcap indices also traded in sync and gained nearly 1% each. Among individual stocks, Eicher Motors gained over 5% on Wednesday after reporting strong September quarter earnings. Tech Mahindra, Hindalco Industries, Tata Motors and Infosys were among the other top gainers on the Nifty. The big laggards of the day were Bajaj Finance, Power Grid Corporation, IndusInd Bank.
