NSE benchmark Nifty closed at record high of 10,167.45 while the Sensex ended 250 points higher at 32,432.69, as data on Thursday showed inflation held steady, instead of accelerating as previously expected. This has raised hopes among investors that the central bank would be less hawkish about interest rates. The data released late Thursday showed annual consumer price inflation rose to 3.28 percent in September from a year earlier, in line with August and countering expectations of a rise to 3.60 percent. At the same time, separate data showed factory output hitting a nine-month high of 4.2 per cent in August.
- Nifty hit fresh all-time high of 10,179.15 on Friday
- Sensex jumped over 300 points to 32,488.85
- Retail inflation rose to 3.28% in September, against expectation of 3.6%
Although analysts still expect the Reserve Bank of India to keep rates steady in the months ahead, they said further signs of steady inflation would raise the odds of a rate cut.
"We expect the RBI to stay on hold in our base case (75 percent probability), but given the possibility of undershooting on macro forecasts, we also assign a 25 percent probability to a cut," Nomura said in a note.
The banking sub-index of NSE - Nifty Bank - closed 1.34 per cent higher after gaining as much as 1.71 per cent as day's high, as investors rushed to buy banking stocks on rate cut hopes. ICICI Bank, HDFC Bank, Kotak Mahindra Bank and Yes Bank rose between 1.1-2.5 per cent.
Markets also got a boost after Bharti Airtel shares rallied on a deal to buy the Tata conglomerate's consumer mobile business, while Reliance Industries Ltd stock rallied as much as 2 per cent ahead of its results later in the day.
The benchmark 10-year bond yield fell 2 basis points to 6.73 percent on Friday, while the rupee strengthened to 64.87 per dollar from its 65.09 close on Thursday on hopes that a steady inflation would continue to attract foreign investors to Indian markets.
Among individual share moves, Bharti Airtel rose as much as 9.2 per cent to its highest since Aug. 29 and was the top percentage gainer on both Nifty and Sensex, while Tata Teleservices (Maharashtra) Ltd jumped 9.9 per cent.
Upbeat second-quarter results pushed shares of Tata Consultancy Services Ltd (TCS) to their highest since June 7. While quarterly profit slid marginally year-on-year, analysts say margin recovery was the key positive. TCS' operating margin rose 170 basis points sequentially to 25.1 per cent in the September quarter.
Meanwhile, Reliance Industries climbed as much as 2.1 percent to a record high ahead of its September-quarter results. Analysts expect higher earnings from the oil-to-telecom conglomerate's core petrochemical business, while gross refining margins are expected to remain largely flat.
Finally, Nifty closed 71.05 points higher at 10,167.45 while the BSE Sensex ended 250.47 points or 0.77 per cent at 32,432.69. (With agency inputs)