Indian Markets Surge Following Positive U.S. Inflation Data

Indian stock markets saw an uplift on Thursday, buoyed by positive U.S. inflation data which increased prospects for a Fed rate cut. The Nifty 50 and BSE Sensex both opened higher, with sectoral indices showing positive trends. Global markets, including Asia, also responded robustly.

Indian stock markets opened higher on Thursday, fueled by a global rally following the release of U.S. inflation data that showed signs of moderation in August. The Nifty 50 index gained 0.57 per cent, or 141.20 points, reaching 25,059.65 points. Similarly, the BSE Sensex rose 0.5 per cent, or 407 points, to 81,930.18 points.

The global markets reacted positively to the U.S. inflation data, which increased the likelihood of a Federal Reserve rate cut on September 18th. 'Latest US inflation numbers are mildly positive for markets. August CPI inflation came in at 0.2 per cent, bringing the 12-month inflation down to 2.5 per cent from 2.9 per cent. This sets the stage for a rate cut by the Fed, although the high core inflation of 3.2% suggests the Fed will settle for a 25bp rate cut rather than 50bp,' said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Vijayakumar also noted that Indian CPI inflation is expected to be around 3.5 per cent in August, potentially paving the way for a rate cut by the MPC in 2024. Positive inflation and rate cut prospects are seen as favorable for stock markets. On the National Stock Exchange, all broad market indices opened in the green, including the Nifty Next 50 and Nifty 100. Nifty Metal and Nifty PSU Bank led sectoral gains, rising 1.29 per cent and 0.23 per cent, respectively.

However, shares of Tata Motors fell by around 0.5 per cent. The Bajaj Housing Finance IPO received a record Rs 3.23 lakh crore from 89 lakh investors. Asian markets also showed strength on Thursday. Japan's Nikkei 225 index surged about 2.7 per cent, while Taiwan's Taiwan Weighted index jumped over 3 per cent. South Korea's KOSPI and Hong Kong's Hang Seng also posted gains, driven by the broader rally.

In the U.S., markets improved on Wednesday. The S&P 500 and Nasdaq indices rose over 1 per cent and 2.17 per cent, respectively, as U.S. inflation data showed annual inflation declining to 2.5 per cent in August.

(With inputs from agencies.)