Soft US inflation data drives Indian benchmarks to near one-month highs

By Bharath Rajeswaran

BENGALURU (Reuters) -India’s main indexes advanced on Wednesday to near one-month highs, mirroring global stocks after softer-than-expected U.S. inflation data strengthened hopes of an end to the rate-hiking cycle in the world’s largest economy.

The NSE Nifty 50 index settled 1.19% higher at 19,675.45, while the S&P BSE Sensex rose 1.14% to 65,675.93.

The Nifty 50 logged its best single day gain since March 31 and closed at the highest level since Oct. 18.

All 13 major sectors logged gains. High weightage financials added 0.92%. Information technology (IT) stocks jumped 2.59%. Tech Mahindra and Infosys were among the Nifty 50 gainers.

The surge in IT companies, which earn the bulk of their revenue from the U.S., came after softer-than-expected U.S. consumer prices inflation data in October.

Meanwhile, rising hopes of an end to the interest rate hikes following the U.S. inflation data also sparked a rally in stock markets, pushing the U.S. Treasury yields lower. [MKTS/GLOB]

“The cooling inflation in the U.S. has reignited expectations that there would not be another rate hike in this cycle,” said Saurabh Jain, assistance vice president for research at SMC Global Securities.

Moreover, the strong earnings momentum and growth expectations would power a further rise in domestic equities, Jain added.

Realty index climbed 2.95% to a record high. The more domestic-focussed small-caps gained 1.32% to a fresh all-time high, while mid-caps rose 0.96%.

“We do not rule out the possibility of the Nifty and Sensex hitting fresh record highs before the end of 2023,” Sanjiv Bhasin, director of IIFL Securities said, citing the likely rise in foreign inflows after a fall in U.S. Treasury yields and strong corporate earnings.

Among individual stocks, Hindalco Industries and Eicher Motors extended their post-earnings rally, rising 3.67% and 5.57%, respectively. The two stocks were among the top Nifty 50 gainers.

(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Varun H K, Nivedita Bhattacharjee and Dhanya Ann Thoppil)