IT And Pharma Stocks Boost Indian Markets Ahead Of U.S. Inflation Data

Indian shares rebounded on Tuesday, ending the day higher thanks to gains in IT and pharmaceutical sectors. The Nifty 50 index closed up 0.42% at 25,041.1, while the S&P BSE Sensex rose 0.44% to 81,921.29. Both indexes started on a positive note but briefly dipped, weighed down by heavyweight financials.

IT Sector Leads the Rally
The IT sector saw a 1.7% rise ahead of Wednesday’s U.S. inflation report. Indian IT companies, which generate a substantial portion of their revenue from the U.S., benefited from optimism that softer inflation data might lead to a 50-basis-point rate cut by the Federal Reserve. This could spur a global stock rally.

Sunny Agrawal, head of fundamental equity research at SBICaps Securities, noted that the market is currently pricing in a smaller 25-basis-point rate cut, but a larger cut could provide further momentum.

Pharma Stocks Gain on Tax Cuts
Pharma stocks climbed 1.1%, with the sector receiving a boost after the Goods and Services Tax (GST) Council recommended reducing taxes on select cancer drugs. Divi’s Laboratories, a leading pharma company, surged by 5% to a near three-year high following block deals.

Defensive Stocks in Focus
Investors are moving funds into defensive sectors like pharma and consumer goods, as these segments are considered safe bets ahead of the U.S. Federal Reserve’s potential rate cut decision.

Financials See Modest Decline
Financial stocks, in contrast, fell by 0.3%, largely due to weak performances by HDFC Life and SBI Life. Both companies reported modest growth in premiums for August, which dampened market sentiment in the sector.

Mid-Caps and Small-Caps Shine
Meanwhile, small- and mid-cap stocks, more focused on domestic markets, saw gains of about 1.2% each. Budget airline SpiceJet also gained 3% after Carlyle Aviation agreed to convert $30 million of lease arrears into equity.

Outlook Hinges on U.S. Data
While the market remains buoyant, a clear direction for domestic equities will likely emerge after the release of U.S. inflation data and the Federal Reserve’s interest rate decision next week, analysts noted.