Inflation breather takes markets to another fresh highs

Mumbai: Equity benchmark indices Sensex and Nifty hit their fresh record levels on Thursday after lower inflation numbers raised hopes of an interest rate cut by the RBI. Besides, heavy buying in capital goods, consumer durable and industrial stocks also helped the indices, traders said. Retail inflation continued its downward slide to reach a one-year low of 4.75 per cent in May due to a marginal decline of prices in the food basket and remained within the Reserve Bank’s comfort zone of below 6 per cent, according to government data released on Wednesday. Investors richer by Rs2.35 lakh cr as the market capitalisation (mcap) of BSE-listed companies on Thursday rose by Rs2.35 lakh crore to Rs4,31,67,541.81 crore (Rs431.67 lakh cr or $5.17 trn).

Rising for the second day in a row, the 30-share BSE Sensex jumped 538.89 points or 0.70 to hit its lifetime peak of 77,145.46. It ended at a fresh record high at 76,810.90, up 204.33 points or 0.27 per cent. A total of 2,345 stocks advanced, 1,539 declined, and 100 remained unchanged on the BSE. The NSE Nifty rallied 75.95 points or 0.33 per cent to settle at a new closing high of 23,398.90. During the day, it climbed 158.1 points or 0.67 per cent to its record peak of 23,481.05.

“The domestic equity benchmark traded with a modest gain, with domestic CPI data indicating that inflation is on a slow track of decline. A similar trend is reported in the US CPI, which brought down the market expectation from two rate cuts in 2024 to 1, which is having a mixed effect on the global markets. In the domestic broader market, the realty and consumer durable sectors took the lead owing to government initiatives to revive the affordable housing segment,” said Vinod Nair, head (research), Geojit Financial Services.

“European stocks gave up some gains Thursday after the US Fed struck a more hawkish tone on interest rates and lowered its interest rate cut projections to just one this year. Asian shares were trading mixed on Thursday after the Federal Reserve opted to keep its benchmark interest rate unchanged,” said Deepak Jasani, head (retail research) at HDFC Securities.

“There is good news on the inflation front, both in the US and in India. The takeaway from the inflation numbers is that the disinflation process is well on track. From the market perspective, this is positive news, particularly for banking stocks,” said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Among the 30 Sensex companies, Mahindra & Mahindra, Titan, Larsen & Toubro, IndusInd Bank, Tech Mahindra, UltraTech Cement, Wipro, Tata Consultancy Services, Bajaj Finance and Nestle were the biggest gainers.