Index heavyweights such as Infosys and Reliance Industries led gains on NiftyDomestic shares rose on Tuesday, after inflation rate plummeted to an 18-month low, raising optimism that central bank could ease monetary policy next month, as nation faces a manufacturing slowdown and weak growth in farm sector.
Annual retail price inflation declined to 2.19 per cent in December, its lowest level since June 2017, as food prices fell for a third straight month, government data showed on Monday.The outcome was lower than 2.33 per cent recorded in November and broadly in line with a 2.20 per cent increase forecast by economists in a Reuters poll.The Reserve Bank of India's (RBI) Monetary Policy Committee, which mainly monitors retail inflation data and kept interest rates unchanged last month, will have a leeway to soften its monetary stance at its February 7 meeting, economists said.The broader NSE Nifty was up 0.88 per cent at 10,832.10 as of 11:02 am, while benchmark BSE Sensex rose 0.88 per cent to 36,170.63."The macro numbers are showing a deceleration.
Though some market participants are probably building it in that RBI stance could change," said Dhananjay Sinha, head-Institutional Research, Economist and Strategy at Emkay Global Financial Services."There might be certain positivity in market, as data is coming on backdrop of considerable uncertainty and a correction in last session.
However, I expect that RBI will not cut rates soon because core inflation is still higher and decision will rather be on core inflation number than headline inflation," Mr Sinha said.Index heavyweights such as Infosys and Reliance Industries led gains on Nifty, rising as much as 3.2 and 2.8 per cent, respectively.
Infosys shares hit their highest since October 8.Banks also cheered inflation relief with most of them trading in green.
Yes Bank rose nearly 5 per cent to an over eight-week high, while HDFC Bank Ltd gained up to 0.6 per cent.IT stocks also firmed footing, with Nifty IT index rising as much as 2.3 per cent.
Wipro shares advanced 3.8 per cent in their best intraday percentage gain since December 13, after it said on Monday that a bonus share issue will be considered in its board meeting on Friday.