Sensex Today: Indian shares jumped to three-week highs in early trade on Tuesday, as rate hikes fears were soothed after the country’s central bank said inflation looked set to ease and as risk sentiment improved globally on Britain’s fiscal policy U-turn.
The Reserve Bank of India (RBI) should pause interest rate hikes, despite unacceptably high inflation, to avoid stalling a recovery in economic growth, monetary policy committee member Jayant Varma told Reuters in an interview on Monday.
Varma’s comments came as the RBI, in its monthly bulletin on Monday, said the country’s retail inflation was set to ease from the five-month high of 7.41% hit in September, while economic activity is poised to expand.
The S&P BSE Sensex ended at 58,961, up 550 points or 0.94 per cent, while the Nifty50 closed at 17,487, 175 points or 1 per cent, higher. The indices hit intra-day highs of 59,144, and 17,528, respectively.
In the broader markets, the Nifty MidCap and SmallCap indices gained 1.2 per cent, and 0.75 per cent, respectively. Overall, the market breadth firmly favoured buyers in the ratio of 2:1. Volatility index, India VIX, meanwhile eased over 5 per cent.
Shares of public sector undertaking (PSU) banks were trading higher for a third straight day, with the Nifty PSU Bank index surging 7 per cent in the past two trading days on the National Stock Exchange (NSE).
Mohit Nigam, Fund manager & Head – PMS, Hem Securities, said: “Indian markets closed higher for a second straight session on Monday. Today, the markets are likely to open in green on firm global cues. The US markets ended higher yesterday after Britain reversed course on an economic plan, while Bank of America was the latest financial company to post solid quarterly results, which lifted optimism about the corporate earnings season. Asian markets are trading mostly in green after Wall Street’s rally overnight.”
He further said: “Traders may take note of an RBI article stating that India needs to set up a dedicated wing in the environment ministry to release estimates of Green GDP periodically on a regular basis and create a user-friendly data dissemination platform. However, there may be some cautiousness as the State of the Economy report released by the Reserve Bank of India (RBI) stated that the headline consumer price index (CPI)-based inflation, which stood at 7.4 percent in September, might have peaked and could fall going ahead thanks to easing momentum and favorable base effects.”
The sugar industry stocks will be in focus as industry body ISMA said the country’s sugar production is projected to be 36.5 million tonnes in the 2022-23 marketing season, an increase of 2 percent compared to the year-ago period, he added.
Rupee Opens
The Indian rupee opened 15 paise lower at 82.20 per dollar on Tuesday against the previous close of 82.35.
Global Cues
Asia stocks nudged higher on Tuesday as the dramatic U-turn in British fiscal policy brightened investor sentiment, while the U.S. dollar took a breather at its lowest levels in more than a week as a revival in risk-taking lowered its appeal.
Tokyo stocks opened higher Tuesday as investors took heart from rallies on Wall Street on eased worries over corporate earnings. The benchmark Nikkei 225 index was up 1.54 per cent, or 413.56 points, at 27,189.35 in early trade, while the broader Topix index was up 1.29 per cent, or 24.25 points, at 1,903.81.
US stocks kicked off the trading week on Monday with a rally after Britain reversed course on an economic plan, while Bank of America was the latest financial company to post solid quarterly results, which lifted optimism about the corporate earnings season.
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