Indian Stock Markets Rise Following Global Rally on U.S. Inflation Data

Indian stock markets opened higher on Thursday, buoyed by a global stock market rally after U.S. inflation data for August indicated moderation. The Nifty 50 index climbed 0.57% or 141.20 points to 25,059.65, while the BSE Sensex surged 0.5% or 407 points to 81,930.18.

Global markets reacted positively to the U.S. inflation data, which raised expectations for a Federal Reserve rate cut on September 18. “The latest U.S. inflation numbers are somewhat favorable for markets. The August CPI inflation at 0.2% has reduced the 12-month inflation rate to 2.5% from 2.9%. This improves the likelihood of a Fed rate cut in September. However, with core inflation still high at 3.2%, the Fed may opt for a cautious 25 basis point cut instead of 50 basis points,” explained V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

He also noted that “India’s CPI inflation is expected to be around 3.5% for August, which could support a rate cut by the MPC in 2024. Overall, favorable inflation conditions and anticipated rate cuts are positive for stock markets.”

On the National Stock Exchange, all major indices, including Nifty Next 50 and Nifty 100, opened in the green. Sectoral indices such as Nifty Metal and Nifty PSU Bank led the gains, increasing by 1.29% and 0.23%, respectively. However, shares of Tata Motors faced continued pressure, falling by approximately 0.5%. Additionally, the Bajaj Housing Finance IPO attracted a record Rs 3.23 lakh crore in applications from 89 lakh investors.

Asian markets also opened strongly on Thursday. Japan’s Nikkei 225 surged around 2.7%, Taiwan’s Taiwan Weighted index gained more than 3%, and South Korea’s KOSPI and Hong Kong’s Hang Seng both saw increases, following the global stock rally.

In the U.S., markets experienced gains on Wednesday, with the S&P 500 and Nasdaq indices rising over 1% and 2.17%, respectively, after the U.S. inflation data showed a drop in annual inflation to 2.5% in August.