By Bharath Rajeswaran and Yagnoseni Das
BENGALURU (Reuters) -Indian shares hit record highs on Thursday as commodity stocks jumped on expectations that China is likely to cut interest rates on mortgages to boost consumption.
The Nifty 50 index and the S&P BSE Sensex rose about 2% each, hitting lifetime highs during the session.
The Nifty ended 1.89% higher at 25,388.9, while the Sensex rose 1.77% to 82,962.71. Both the benchmarks also hit closing high levels during the session, which was their best since early June.
They have gained 17% and 15%, respectively this year and are among the best performing globally, boosted by policy continuity, a strong macroeconomic outlook and liquidity surplus.
The Sensex crossed the 83,000 mark for the first while the Nifty logged its 55th record high in 2024.
Indian markets opened higher on the day, logging gains of about 0.5%. However, a sharp uptick around 2 p.m. IST lifted the benchmarks to record highs.
All of the 13 major sectors gained. Metals jumped about 3%, while the energy and auto indexes gained about 2%.
China is expected to cut interest rates on mortgages, starting September, to boost consumption, according to a Bloomberg report. This, along with positive global cues, boosted markets, said Narendra Solanki, head of equity research at Anand Rathi.
“If China cuts mortgage rates, it would fuel liquidity in global markets and commodities should rally since China is the world’s largest consumer of commodities, along with multiple rate cuts in the near term by big economies like the U.S. and European Union,” Solanki said.
U.S. consumer prices rose slightly in August, but underlying inflation showed some stickiness, according to data on Wednesday.
The odds of a 25-basis-point Fed rate cut on Sept. 18 rose to 85% from 66% a day ago, while the case for a larger 50-bps reduction dwindled to 15% from 34%, according to CME FedWatch.
Some analysts also pointed to a likely bulk buying of stocks across sectors by foreign investors after European markets opened as a reason for the surge in momentum in the final two hours.
Meanwhile, investors await India’s consumer inflation data for August, due later in the day.
Inflation probably held below the central bank’s 4% target for a second straight month, per a Reuters poll of economists.
($1 = 83.9830 Indian rupees)
(Reporting by Bharath Rajeswaran and Yagnoseni Das in Bengaluru; Editing by Sonia Cheema)
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