Equity markets in India rallied in early trade on Tuesday, with the benchmark Sensex surging 222 points as positive cues from Asian and global markets bolstered investor sentiments. The BSE Sensex climbed 222.88 points or 0.37% to 60,654.72 while the broader Nifty rose 56.40 points or 0.32% to 17,827.30. Among the 30 Sensex shares, 17 were trading in the positive territory, including Reliance Industries, Infosys, and Tata Consultancy Services.
The positive trend was fuelled by positive cues from the global markets, where Asian shares tracked the bounce on Wall Street on Tuesday, as investors remained hopeful that key US economic data due later would show an easing in inflation. Markets in Japan and Hong Kong were trading in the green, while the European as well as the US indices closed with gains on Monday. Investors in India and elsewhere seem to be expecting a moderation in inflation in the US, which would also have an impact on the interest rate hike cycle.
Foreign Portfolio Investors (FPIs) remained net buyers on Monday, purchasing shares worth Rs 1,322.39 crore, data with the BSE showed. This indicates that foreign investors are maintaining their faith in the Indian markets and the Indian economy. Deepak Jasani, Head of Retail Research at HDFC Securities, said that despite the country’s retail inflation jumping to 6.52% in January, the markets were still hopeful for a moderation in inflation in the US.
While the Indian markets opened higher, the Indian retail inflation data for January shows that it had breached the Reserve Bank of India’s (RBI) upper tolerance limit and touched a three-month high. The spike in retail inflation is mainly due to higher prices in the food basket, including cereals and protein-rich items. The RBI, in its monetary policy review, had warned of high inflation and revised its forecast upwards. This may cause concern for the Indian economy and the markets in the long term.
However, for now, the markets are moving ahead with positivity, and the rally in early trade on Tuesday indicates that investors remain optimistic about the Indian economy and the global economic outlook.
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