A sharper-than-expected decline in India’s retail inflation is likely to buoy market sentiment on Wednesday. The absence of a rise in US inflation has strengthened hopes of interest rate cuts. Wall Street’s strong rally overnight, which lifted major Asian indices, is expected to have a positive influence on Indian markets. Policy changes on tariffs and progress in Ukraine peace talks are also drawing investor attention.
In the derivatives market, Gift Nifty closed at 24,619.00 on Tuesday night. It touched 24,647.50 in early Wednesday trade before easing. Futures suggest Indian equities may open higher today.
India’s July retail inflation eased to 1.55 percent from 2.10 percent in June — the lowest in eight years. This brought average inflation for April–July down to 3 percent.
Food prices fell 1.8 percent in July, compared with a 1.1 percent decline in June. Vegetable prices dropped 20.7 percent and pulses 14 percent, while fruit prices fell 14.4 percent. Edible oils and ghee, however, rose 19.2 percent.
Core inflation, excluding food and fuel, climbed to 4.4 percent in July from 4.1 percent in June, indicating higher prices for manufactured goods and services.
Direct tax collections up to August 11 recorded an unexpected 3.95 percent fall to ₹6.64 lakh crore, which the government attributed to higher refunds. Even gross tax collections before refunds were 1.87 percent lower.
The Union Budget projects a 12.7 percent growth in direct tax collections for FY26, targeting ₹25.20 lakh crore. However, with more than one-third of the fiscal year elapsed, the latest data suggests the actual figure could fall significantly short.
Direct taxes include corporate tax, personal income tax, and securities transaction tax. Corporate advance tax payments have been weaker than expected due to lower profits, while personal income tax receipts have also declined, reflecting slower GDP growth.
European markets ended mostly higher on Tuesday, except for Germany. Reports suggesting Norway’s sovereign wealth fund would divest from Israeli companies over the Gaza conflict were denied. In the UK, employment growth exceeded forecasts, but unemployment hit a four-year high.
Supported by softer inflation data, US stocks closed sharply higher on Tuesday. The S&P 500 and Nasdaq Composite ended at record levels.
US retail inflation rose 2.7 percent year-on-year in July, below expectations of 2.8 percent. Core inflation, excluding food and fuel, was 3.1 percent, slightly above the expected 3 percent. Market surveys now indicate a 94 percent probability of a rate cut in September, with 67 percent odds of further cuts in October and December.
The Dow Jones Industrial Average climbed 483.52 points (1.10 percent) to 44,458.61. The S&P 500 gained 72.31 points (1.13 percent) to close at 6,445.76, while the Nasdaq Composite surged 296.50 points (1.39 percent) to 21,681.90.
Futures were positive early Wednesday, with Dow up 0.03 percent, S&P 0.21 percent, and Nasdaq 0.51 percent.
Japan’s Nikkei rose 1.35 percent to a record high, South Korea’s benchmark gained 1 percent, and Hong Kong and mainland Chinese indices were also in positive territory. Australia’s market slipped.
Prospects of a Ukraine ceasefire and easing inflation initially pushed Indian markets higher on Tuesday, but gains reversed later. Nifty fell 97.65 points (0.40 percent) to 24,487.40, while Sensex dropped 368.49 points (0.41 percent) to 80,235.59. Bank Nifty slid 467.05 points (0.84 percent) to 55,043.70.
The BSE MidCap 100 index eased 154.15 points (0.27 percent), while the SmallCap 100 edged up 6.40 points (0.04 percent).
Market breadth was evenly split, with 2,022 BSE stocks advancing and 2,033 declining. On NSE, 1,421 stocks gained while 1,542 fell. Foreign portfolio investors net sold ₹3,398.80 crore in the cash market, while domestic institutions bought ₹3,507.93 crore.
Nifty faces resistance at 24,700–24,850 and has support at 24,460 and 24,400. Momentum indicators suggest weakening strength unless the index breaks above key resistance.
Cochin Shipyard: Revenue up 38.5 percent, operating profit up 35.7 percent, net profit up 7.9 percent.
Hindalco: Q1 revenue up 13 percent; net profit up 30 percent to ₹4,004 crore.
Apollo Hospitals: Revenue up 14.9 percent; net profit up 41.8 percent.
Nykaa (FSN E-Commerce Ventures): Revenue up 23.4 percent; net profit surged 79.4 percent.
Honasa Consumer: Revenue rose 7.4 percent; net profit up 2.6 percent.
Suzlon Energy: Revenue jumped 55 percent to ₹3,132 crore; net profit up 7.3 percent to ₹324.3 crore. CFO Himanshu Modi resigned.
Jindal Steel & Power: Revenue fell 9.7 percent; net profit up 11.8 percent.
Oil India: Revenue down 2.4 percent; net profit up 0.56 percent.
NSDL: Revenue down 7.5 percent; net profit up 15.2 percent.
US inflation data reinforced rate-cut expectations, but gold prices saw only modest gains. Spot gold rose $7 to $3,350.90 per ounce, briefly touching $3,354.60 before easing. In Kerala, gold fell ₹640 per sovereign to ₹74,360 on Tuesday. Silver was steady at $37.95 per ounce.
The US dollar index slipped to 98.10, with the euro rising to $1.1677, the pound to $1.3499, and the yen strengthening to 147.77 per dollar. The rupee closed at 87.71 per dollar, five paise weaker, marking its lowest closing level.
Brent crude closed slightly lower at $66.12 per barrel; WTI stood at $63.13 and Murban at $68.32. Natural gas prices fell 0.50 percent.
Cryptocurrencies rebounded, with Bitcoin trading above $120,000 and Ether up 8 percent to just under $4,600.