Indian stocks were off to a positive start Wednesday,
tracking firm overnight cues from the US markets after softer-than-expected US
inflation data supported the view that its central bank may be done raising
interest rates.
S&P 500 closed 1.91 per cent higher at 4,495.70
points. At the opening bell here in India, benchmark indices Sensex and Nifty
were about 1 per cent higher each, with all sectoral indices in the green.
Among the most-tracked Nifty 50 companies, Hindalco,
ONGC, LTI Mindtree, Tech Mahindra, and JSW Steel were the top five gainers,
ranging between 2-5 per cent.
“The October US inflation data is a game changer for
the stock market. The 3.2 per cent October inflation print is lower than
expected. More importantly, the mere 0.2 per cent MoM increase in core
inflation is hugely positive. The takeaway from these numbers is that the Fed
is done with rate hikes and the timeline for rate cuts in 2024 is likely to be
advanced,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial
Services.
“The sharp recovery in US markets will be reflected in
India, too. The short covering can add to the rally. FIIs are likely to turn
buyers, lest they miss out on the rally in the best-performing large economy in
the world. Leading financials which were weighed down by FII selling will
bounce back,” Vijayakumar added.
Foreign portfolio investors (FPIs) sold stocks worth
Rs 14,768 crore, Rs 24,548 crore, and Rs 477 crore, respectively, in September,
October, and so far in November, data from the National Securities Depository
showed.
Also, retail inflation in India easing to a four-month
low in October and slowly aligning with RBI’s 4 pe per cent target, and
wholesale inflation continuing to stay in the negative zone too have supported
the stocks. The October consumer price index (CPI) came at a four-month low of
4.87 per cent against 5.02 per cent the previous month, official data showed
earlier this week.
Barring the recent pauses, the RBI has raised the repo
rate by 250 basis points cumulatively since May 2022 in the fight against
inflation. Raising interest rates is a monetary policy instrument that
typically helps suppress demand in the economy, thereby helping the inflation
rate decline.
ANI
