Lower-than-expected inflation in the US bolstered equities across the globe as investors turned to riskier assets. Hopes that the US Federal Reserve may go slow on its rate hike plan pumped up equities, cooled off bond yields, and supported the Indian rupee. The US retail inflation for July came in at 8.5 per cent, as against estimated 8.7 per cent, and 9.1 per cent in June. At Close, the Sensex was up 515.31 points or 0.88 per cent at 59,332.60, and the Nifty was up 124.20 points or 0.71 per cent at 17,659.00.
Top Gainers & Losers
Axis Bank, IndusInd Bank, HDFC, Tech M, Bajaj Finance, SBI, and Wipro added over 2 per cent each, while TCS, Kotak Bank, Titan, ICICI Bank, Infosys, and HCL Tech rallied between 1 and 2 per cent. On the flipside, Tata Consumer Products, Apollo Hospitals, ITC, NTPC, Airtel, and HUL were the top laggards.
From sectoral viewpoint, the Nifty PSB index gained the most, up 2.3 per cent, followed by the Nifty IT index, up 1.8 per cent.
Meanwhile, in the broader market, the BSE MidCap and SmallCap indices edged between 0.5 per cent and 0.8 per cent higher.
Among individual stocks, shares of Eicher Motors hit 52-week high at Rs 3,256 per share after the auto major reported over two-fold jump in consolidated net profit to Rs 611 crore in Q1FY23.
Besides, shares of Coal India, too, hit 52-week high at Rs 226 per share after the miner saw 178 per cent jump YoY in consolidated net profit to Rs 8,834 crore in Q1FY23.
Dr. VK Vijayakumar, chief investment strategist at Geojit Financial Services, said: “US inflation data at 8.5 per cent in July will be a near-term boost to markets. Many market experts believe that the peaks of inflation and Fed hawkishness are behind us. The next Fed rate hike is, therefore, likely to be 50 bp and not 75bp. This also increases the probability of a soft landing in the US. The near-term texture of the market is likely to be bullish. But this need not sustain for two reasons. One, market valuations are high and this will attract profit booking. Two, details of the US inflation data reveals that inflation is unlikely to drift down steadily since wage growth and rents continue to rise. So, the Fed may continue to be hawkish impacting market optimism.”
“The decline in dollar index to below 106 is supportive of more capital flows to emerging markets and India is the outperformer in the EM universe,” he added.
Asian shares tracked Wall Street higher on Thursday after a softer-than-expected US inflation report encouraged bets of less aggressive rate hikes from the Federal Reserve, while the dollar remained bruised after its biggest plunge in five months.
Wall Street surged on Wednesday, putting the Nasdaq more than 20 per cent above its June low, after US inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes.