Sensex Rises 250 Points on Softer Inflation; Nifty Surges Past 22,450

Indian benchmark equity indices saw modest gains on Thursday, supported by strength in banking and IT stocks. Investor sentiment improved following softer-than-expected inflation data from both the United States and India, which raised hopes of a more stable economic outlook. The easing inflation figures provided relief to the markets, as they suggested that central banks might adopt a less aggressive approach toward interest rate hikes. Banking and IT stocks were among the top performers, driving the indices higher and contributing to the overall positive market tone.

Indian equity markets were trading higher on Thursday morning, but further gains could be limited due to renewed trade tensions. U.S. President Donald Trump recently threatened to escalate the ongoing trade conflict by imposing additional tariffs on Europe and Canada, following their decision to introduce retaliatory measures against his earlier trade restrictions. This development has introduced a degree of caution among global investors.

At around 10:10 am, the BSE Sensex was up by 253 points, or 0.35%, trading at 74,401.11. The Nifty50 also posted gains, rising 64 points, or 0.29%, to trade at 22,535. Despite the positive momentum in the domestic market, the uncertainty surrounding global trade policies could weigh on investor confidence as the session progresses.

U.S. consumer prices recorded a moderate increase in February, providing some temporary relief to investors and policymakers. The latest inflation data suggests that price pressures remain relatively contained for now. However, analysts caution that the data may not yet reflect the full impact of the tariffs imposed by President Donald Trump. As these trade measures begin to take effect, they could lead to increased costs for businesses and consumers, potentially adding upward pressure on inflation in the coming months.

The prospect of higher U.S. tariffs on major trading partners is raising concerns about upward pressure on inflation. If these tariffs lead to increased costs for imported goods, it could push overall price levels higher, potentially influencing the Federal Reserve’s monetary policy decisions. In response to rising inflation risks, the Fed may opt to maintain higher interest rates for an extended period to keep inflation in check.

On the other hand, India’s retail inflation eased to below 4% in February, marking a notable decline. This moderation in price growth could give the Reserve Bank of India (RBI) more flexibility in its future policy decisions. If inflation remains under control, the central bank may have greater scope to consider rate cuts in upcoming meetings to support economic growth.

Within the Sensex pack, several stocks opened on a positive note, contributing to the overall strength in the market. Tata Steel, IndusInd Bank, Power Grid, NTPC, and Bajaj Finserv were among the early gainers, reflecting strong buying interest and positive sentiment around these stocks.

Conversely, some major stocks faced initial pressure and opened lower. M&M, Adani Ports, Axis Bank, Tata Motors, and UltraTech Cement saw declines in early trade, indicating some profit-taking or cautious sentiment among investors. The mixed performance within the Sensex components reflects the broader market’s balanced tone as investors weigh domestic and global economic cues.

From a sectoral perspective, key indices in the banking, information technology (IT), and metal segments showed positive momentum in early trading. The Nifty Bank index recorded modest gains, reflecting strength in leading financial stocks. Similarly, the Nifty IT index advanced, supported by buying interest in major technology firms. The metal index also saw an uptick, suggesting increased investor confidence in the sector. Overall, these sectoral gains were capped at around 0.4% during the early trading session, contributing to the broader market’s positive tone.

Shares of MTNL witnessed a sharp rally, climbing nearly 14% in early trade after the company reported significant earnings from asset monetization. According to data presented by the Minister of State for Communications, Pemmasani Chandra Sekhar, in the Lok Sabha, MTNL generated earnings of Rs 2,134.61 crore through the monetization of its land and building assets. This announcement appears to have boosted investor confidence, driving strong buying interest in the stock. The substantial proceeds from asset sales are seen as a positive development for the company’s financial position and future outlook.

The stock market is expected to navigate a mix of supportive domestic factors and challenging global conditions, according to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. On the domestic front, key macroeconomic indicators have shown encouraging trends. The Consumer Price Index (CPI) inflation rate declined to 3.75% in February, falling below the Reserve Bank of India’s (RBI) target of 4%. This decline in inflation suggests that price pressures are easing, which could create a more stable economic environment.

In addition, the Index of Industrial Production (IIP) surged to 5.01% in January, marking an eight-month high. This indicates a healthy balance between economic growth and inflation, which could provide the Reserve Bank of India’s Monetary Policy Committee (MPC) with a favorable backdrop to consider a rate cut in its upcoming April meeting.

However, Dr. Vijayakumar cautioned that while this positive domestic data would typically be a catalyst for market gains, the broader global environment remains uncertain. The escalating trade tensions sparked by U.S. President Donald Trump’s tariff measures have created a challenging backdrop for global markets. This unfavorable external scenario may limit the extent to which the positive domestic factors can drive market performance in the near term.

Asian Markets:

Technology stocks led gains across Asian markets on Thursday, following positive cues from Wall Street’s overnight performance. U.S. inflation data came in weaker than expected, easing investor concerns about the health of the U.S. economy and fueling optimism in global markets.

Japan’s Nikkei index advanced by 0.9%, supported by strength in major chip-sector stocks. Advantest and Tokyo Electron were among the top gainers, reflecting renewed confidence in the technology sector. Taiwan’s tech-heavy equities index also climbed by 0.6%, while South Korea’s KOSPI rose by 0.7%, driven by strong demand for technology shares.

Wall Street Performance:

In the U.S., the S&P 500 closed 0.5% higher on Wednesday, while the tech-focused Nasdaq jumped by 1.2%. Megacap technology stocks, which had faced pressure in recent sessions, staged a sharp rebound, helping to lift overall market sentiment. Futures tied to both the S&P 500 and Nasdaq suggested a continuation of this positive momentum, pointing to a modest 0.1% increase in early Thursday trade.

FII/DII Activity:

Data from March 12 showed that Foreign Institutional Investors (FIIs) remained net sellers in the Indian equity market, offloading stocks worth Rs 1,627.6 crore. In contrast, Domestic Institutional Investors (DIIs) were net buyers, purchasing equities valued at Rs 1,510.4 crore. This contrasting trend reflects differing outlooks between foreign and domestic investors regarding market conditions.

Crude Oil Movement:

Oil prices edged lower on Thursday after posting significant gains in the previous session. Concerns over the potential impact of escalating trade tensions on global economic growth and energy demand weighed on market sentiment, despite a larger-than-expected draw in U.S. gasoline inventories. Brent crude futures slipped by 7 cents, or 0.1%, to $70.88 a barrel by 0107 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures declined by 11 cents, or 0.2%, to $67.57 a barrel.

Currency Market:

In the currency market, the Indian rupee strengthened against the U.S. dollar, gaining 8 paise to trade at 87.14 in early session on Thursday. The improvement in the rupee’s value was supported by a slight weakening in the U.S. dollar. The dollar index, which measures the greenback’s strength against a basket of six major global currencies, edged down by 0.02% to 103.6.