Sensex, Nifty scale fresh peaks as inflation cools off

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. 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 2 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 of Research, 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. On the other hand, Hindustan Unilever, Power Grid, Axis Bank, Bharti Airtel, ICICI Bank and ITC were among the laggards. In the broader market, the BSE smallcap gauge climbed 0.89 per cent, and midcap index rallied 0.79 per cent. Among the indices, realty jumped 2.15 per cent, capital goods (2.05 per cent), industrials (1.67 per cent), IT (1.08 per cent) and consumer discretionary (0.88 per cent). In contrast, telecommunication, bankex and metal were the laggards.

"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 of Retail Research at HDFC Securities. In Asian markets, Seoul and Hong Kong settled higher, while Tokyo and Shanghai ended lower. European markets were trading lower in mid-session trade. US markets ended mostly with gains in the overnight trade on Wednesday. "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.

Federal Reserve officials said on Wednesday that inflation has fallen further toward their target level in recent months, but signalled that they expect to cut their benchmark interest rate just once this year. The policymakers' forecast for one rate cut was down from a previous forecast of three, likely because inflation, despite having cooled in the past two months, remains persistently elevated. Global oil benchmark Brent crude declined 0.71 per cent to USD 82.01 a barrel. Foreign Institutional Investors (FIIs) bought equities worth Rs 426.63 crore on Wednesday, according to exchange data. The BSE benchmark climbed 149.98 points or 0.20 per cent to settle at 76,606.57 on Wednesday. The Nifty ended at 23,322.95, up 58.10 points or 0.25 per cent.