Mumbai. The local stock market witnessed a boom on Thursday as soft retail inflation raised expectations of a cut in the policy interest rate and both the benchmark indices Sensex and Nifty touched new record levels during the day’s trading. Traders said that heavy buying in capital goods, durable consumer goods and industrial stocks also helped push the indices forward.
According to government data released on Wednesday, the Consumer Price Index based retail inflation came down to 4.75 percent in May, which is a one-year low. Retail inflation remains below the Reserve Bank of India’s satisfactory range of four percent (two percent up or down) due to a slight decline in the prices of food items.
During the day’s trading, the BSE’s 30-share index Sensex jumped 538.89 points or 0.70 percent to reach its all-time high of 77,145.46 points. Later it closed at 76,810.90 points with a gain of 204.33 points or 0.27 percent.
The National Stock Exchange (NSE) index Nifty also closed at 23,398.90 points with a gain of 75.95 points or 0.33 percent. During trading, the Nifty climbed 158.1 points or 0.67 percent to reach its new record level of 23,481.05 points. Vinod Nair, Head of Research, Geojit Financial Services, said, “The expectations of a cut in policy rates have been slightly affected by the slow pace of softening of inflation in both India and the US. In the domestic market, the realty and durable consumer sectors have gained from the government’s announcement on affordable housing.” Among the Sensex companies, Mahindra & Mahindra, Titan, Larsen & Toubro, IndusInd Bank, Tech Mahindra, UltraTech Cement, Wipro, Tata Consultancy Services, Bajaj Finance and Nestle were the biggest gainers. On the other hand, shares of Hindustan Unilever, Power Grid, Axis Bank, Bharti Airtel, ICICI Bank and ITC declined.
In the broader market, the BSE Smallcap index rose 0.89 per cent while Midcap gained 0.79 per cent.
Among the sectoral indices, the realty sector saw the highest growth of 2.15 percent and the capital goods sector saw a growth of 2.05 percent. However, the telecom, bank and metal sectors witnessed a decline.
Deepak Jasani, Head of Retail Research, HDFC Securities, said, “European stocks declined after the US Federal Reserve became more aggressive on interest rates. On the other hand, trading in Asian markets was mixed.” In other Asian markets, South Korea’s Kospi and Hong Kong’s Hangseng rose while Japan’s Nikkei and China’s Shanghai Composite suffered losses.
European markets were trading lower in the afternoon session. Most US markets had closed with gains on Wednesday.
Officials at the US central bank Federal Reserve have said that inflation has moved towards its target level in recent months. But they indicated that they expect to cut the key interest rate only once this year. Earlier they had talked about cutting rates three times.
Global oil benchmark Brent crude fell 0.71 percent to $82.01 per barrel. According to stock market data, foreign institutional investors (FIIs) made net purchases of shares worth Rs 426.63 crore on Wednesday. On Wednesday, the Sensex rose 149.98 points to close at 76,606.57 and the Nifty closed 58.10 points higher at 23,322.95.