Sharp Gains For Sensex, Nifty As Peak US Inflation Bets Lift Risk Assets

Equity benchmarks rose sharply on Thursday, a day after data showed US inflation probably peaked, which lifted risk assets globally on slowing Federal Reserve rate hike bets.

The 30-share Sensex index ended 515.31 points, or 0.88 per cent, higher at 59,332.60, and the NSE Nifty closed out the session with 0.71 per cent gains at 17,659.

"Investors cheered the US inflation data for July, which came in below the estimate and raised hopes that the Federal Reserve may not be that aggressive in hiking interest rates in its next meeting. Hence, the optimism spread across Asian markets, including India where investors lapped up banking, IT & realty stocks," said Shrikant Chouhan, Head of Equity Research  for Retail at Kotak Securities.

Axis Bank was the top gainer in the Sensex pack, climbing 2.75 per cent, followed by Bajaj Finance, HDFC, Tech Mahindra, Wipro, SBI, TCS and IndusInd Bank.

On the other hand, ITC, NTPC, HUL, Bharti Airtel, Maruti and Nestle India were among the laggards, sliding as much as 1.56 per cent.

The Nifty started the day sharply higher at 17,711.65 points and surged to a high of 17,719.30 points in the intra-day. There was strong buying support in IT, banking and financial stocks.

Axis Bank surged 2.75 per cent to Rs 759.20. HDFC soared 2.14 per cent to Rs 2449.10. State Bank of India soared 1.95 per cent to Rs 524.55. Kotak Bank soared 1.46 per cent to Rs 1854.15. HDFC Bank rose 1.42 per cent to Rs 1486.75.

Tech Mahindra soared 2.12 per cent to Rs 1077.15. Wipro rose 1.93 per cent to Rs 438.40. The country's largest IT firm Tata Consultancy Services climbed 1.98 per cent to Rs 3422.45.

The index heavyweight Reliance Industries Limited closed 0.32 per cent higher at Rs 2590.20.

Only 11 out of the 30 scrips that are part of the benchmark Sensex closed in the red. ITC slipped 1.56 per cent to Rs 306.30. NTPC slumped 1.38 per cent to Rs 153.55. Hindustan Unilever rose 1.04 per cent to Rs 2612.35. Bharti Airtel fell 0.76 per cent to Rs 709.55.

Maruti Suzuki, Nestle India, Power Grid Corporation, Asian Paints, and Mahindra & Mahindra were among the major Sensex losers.

Foreign institutional investors (FIIs) were net buyers in the Indian capital market as they purchased shares worth Rs 1,061.88 crore on Wednesday, the latest exchange data showed.

Elsewhere in Asia, bourses in Hong Kong, Shanghai and Seoul ended with significant gains, while Tokyo closed in the red. Equities in Europe were trading on a negative note in mid-session deals.

The rally in the domestic markets was supported by a firm trend in global equities, especially the US gauges and a subsequent rally in Asian indices, traders said.

Michael Hewson, chief markets analyst at CMC Markets, said peaking inflation could mean less aggressive interest rate hikes from the US Federal Reserve when it meets in September.

The weaker-than-expected US consumer prices lifted Wall Street, with the momentum rippling through Asian exchanges and into Europe.

MSCI's broadest index of Asia-Pacific shares outside Japan surged 1.4 per cent to the highest in six weeks, buoyed by a 1.8 per cent jump in Hong Kong, a 1.2 per cent advance in South Korean shares and a 1.5 per cent gain in China's blue chips.

The STOXX index of 600 leading European companies was up 0.3 per cent. The MSCI all country index was up 0.11 per cent, but remains down about 14 per cent for the year, wiping out most of 2021's 17 per cent advance.

The World Federation of Exchanges said $18 trillion has been wiped off global markets in the first half of 2022, a 15 per cent drop in stock market capitalisation, as the global economy tries to recover from COVID-19 and deal with fallout from war in Ukraine.

The S&P 500 futures rose 0.2 per cent and Nasdaq futures gained 0.4 per cent, indicating more gains in store on Wall Street.

Overnight on Wall Street, the S&P 500 rose more than 2 per cent, while the Nasdaq Composite added 2.9 per cent. The Nasdaq has now gained more than 20 per cent from its June low.

Meanwhile, the international oil benchmark Brent crude surged nearly 1 per cent to $98.30 per barrel.