Sensex, Nifty hit fresh lifetime highs on positive global cues after Fed outcome, US inflation print

U.S. consumer prices were unexpectedly unchanged in May, while core prices grew at their slowest annual pace in over three years, bolstering bets of a U.S. rate cut in September to 56.7% from 46.8% on Tuesday, according to CMEGroup's FedWatch tool.

That was in contrast to comments from Federal Reserve Chair Jerome Powell, while acknowledging easing inflation, said inflation was still too high and that rate-cut expectations have been pushed out. The central bank held rates steady as expected.

Meanwhile, India's retail inflation eased to a 12-month low of 4.75% in May, down from 4.83% in April, thanks to a drop in fuel prices. However, food inflation increased year-on-year. Economists expect the central bank to hold rates until the October-December quarter.

Barring the FMCG and Media indices, all sectoral indices opened higher. The US rate-sensitive IT index surged nearly 1%, led by , , and . Meanwhile, the Indian rate-sensitive Nifty Financial, Auto, and Realty indices rose between 0.4% and 1.25%.

In the broader market, the Midcap100 gained 0.7%, and the Nifty Smallcap100 rose 0.5%.

Among individual stocks, L&T Finance surged 5% in early trade following reports that Bain Capital is likely to sell its entire stake in the company through a Rs 1,500-crore block deal.

Experts View
"There is good news on the inflation front, both in the US and in India. In US May CPI inflation has declined slightly less-than-expected to 3.3% with MoM inflation remaining flat. However the economy continues to remain strong and there are no clear signs of labour market loosening. Therefore, the Fed chief Jerome Powell has kept rates unchanged and has hinted at only 1 rate cut in 2024 and possibly 4 rate cuts in 2025," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

"In India May CPI inflation has declined to 4.75% and core inflation has come at only 3.1%. This paves the way for a rate cut by the MPC in October. From the market perspective, this is positive news, particularly for banking stocks," Vijayakumar said.

Deven Mehata, Research Analyst at Choice Broking, said, "Nifty can find support at 23,300 followed by 23,200 and 23,150. On the higher side, 23,450 can be an immediate resistance, followed by 23,500 and 23,600."

Global Markets
Asian equities rallied on Thursday as investors weighed cooling U.S. inflation against a more hawkish posture by the Federal Reserve.

MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.9%, with Taiwan stocks jumping 1.7% and Hong Kong's Hang Seng up nearly 1%, buoyed by the U.S. S&P 500 and tech-heavy Nasdaq closing at record highs overnight.

U.S. futures pointed to further gains, with S&P futures up 0.2% and Nasdaq futures adding 0.6%.

FII/DII Tracker
The Foreign institutional investors (FIIs) turned net buyers on June 12 as they bought Indian equities worth Rs 426 crore , while domestic institutional investors bought equities worth Rs 233 crore on the same day.

Crude Oil
Oil prices fell in early trade on Thursday as investors digested news that the U.S. Federal Reserve has opted against cutting interest rates in the near future, while ample U.S. crude and fuel stocks further weighed on the market.

Brent crude futures lost 14 cents, or 0.17%, to $82.46 a barrel, and U.S. West Texas Intermediate (WTI) crude futures fell 16 cents, or 0.2%, to hit $78.34. Both benchmarks had gained about 0.8% in the previous session.

Currency Watch
The Indian rupee fell 5 paise to 83.53 against the US dollar in early trade. The dollar index, which tracks the movement of the greenback against a basket of six major world currencies, rose 0.13% to 104.78 level.

(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)