By Bharath Rajeswaran and Indranil Sarkar
(Reuters) -Indian shares rose on Thursday, led by financials and tracking other global markets, after underlying U.S. inflation softened in December, boosting the likelihood of further rate cuts.
The Nifty 50 rose 0.42% to end at 23,311.8, while the BSE Sensex added 0.42% to close at 77,042.82.
Ten of the 13 major sectors advanced, with high-weightage financials adding 1.2%. State-owned banks rose 2.6% to be the top sectoral gainer.
HDFC Life Insurance climbed about 8%, the most on Nifty 50 and the financial index, and Punjab & Sind Bank gained 6.8%, after the two companies posted strong December-quarter profits.
Global equities climbed on the day after data on Wednesday showed that U.S. core inflation rose less than expected last month, increasing the chances of more Federal Reserve rate cuts and stalling the advance in U.S. Treasury yields and the dollar.
This helped domestic stocks rally on the day, said Apurva Sheth, head of markets perspective and research at SAMCO Securities.
“The U.S. inflation numbers have thrown a pleasant surprise for emerging market equities.”
Lower U.S. rates make emerging markets such as India more attractive for foreign investment.
Traders are now pricing in two Fed rate cuts in 2025, compared to one after strong labour market figures last week, as per the CME FedWatch Tool.
Metal stocks rose 1.7%, as a weaker dollar makes the greenback-priced commodities cheaper for holders of other currencies. [MET/L]
Reliance Industries, the second-heaviest stock on the benchmark indexes, and private lender Axis Bank rose about 1.1% each. Infosys, the country’s No. 2 IT firm, dropped 1.1%.
The three firms report December-quarter results later in the day.
The broader, more domestically-focussed smallcaps and midcaps gained 1.7% and 1.1%, respectively, on the day, with analysts attributing the outperformance over the benchmark index to a technical rebound.
(Reporting by Bharath Rajeswaran and Indranil Sarkar in Bengaluru; Editing by Sonia Cheema and Janane Venkatraman)
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