The equity benchmark indices Sensex and Nifty recovered in early trade on Wednesday, as retail inflation fell to a nearly six-year low of 3.16 percent in April, allowing the Reserve Bank to cut interest rates again in the June monetary policy review.
The 30-share BSE benchmark gauge Sensex was also up by 281.43 points to 81,429.65 in early trade. The NSE Nifty gained 96.65 points to produce 24,675.
Tata Steel, Bharti Airtel, Eternal, Tech Mahindra, Infosys, Mahindra and Mahindra, Bajaj Finserv, and Reliance Industries were the top gainer of Sensex.
Bharti Airtel, a telecom operator, climbed over 2 percent after registering a five-fold rise in the consolidated net profit to Rs 11,022 crore in the March 2025 quarter, primarily on the account of tariff rise effect and one off benefit through tax relief.
Asian Paints, Nestle, Tata Motors, and IndusInd Bank were some of its laggards.
Tata Motors slumped over 1 percent after posting a 51 per cent drop of consolidated net profit to Rs. 8,556 crore in March quarter due to reduced volumes and operating leverage.
"A strong tailwind for the Indian market is the sharp drop in April CPI inflation to 3.16%. This gives the MPC enough room to cut interest rates three times more during this cutting cycle. This is good news for the market in general, and rate sensitives in particular," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.
Retail inflation had dipped to an almost six-year low of 3.16 percent in April largely because of cheaper vegetables, fruits, pulses and other protein-rich items that gave room to the Reserve Bank to lower interest rates again in the June monetary policy review.
In March and April of 2024, CPI-adjusted inflation rate was 3.34 percent and 4.83 percent, respectively. It was 3.15% in July 2019.
"These developments (Indian and US inflation data) are expected to boost investor sentiment. Furthermore, easing trade tensions between the US and China, as well as a reduction in geopolitical frictions between India and Pakistan, are supportive of a favorable market environment," says Vikas Jain, Head of Research at Reliance Securities, said in his pre-open market quote.
