As global economic concerns persist, markets found relief in the decline in retail inflation, both in India and the United States. This has strengthened expectations that central banks may lower interest rates in the coming months, a move that would provide a much-needed boost to equities.
In India, experts predict that the Reserve Bank, having reduced the repo rate from 6.5% to 6.25% in February, may further cut it to 6.0% on 9 April. Additional rate cuts are expected in June and August. The newly appointed RBI Governor, Sanjay Malhotra, appears keen to reduce interest rates and increase liquidity to drive GDP growth. The decline in inflation strengthens the case for such measures.
Meanwhile, reports suggest that the United States Federal Reserve may cut interest rates on 19 April, adding to market optimism.
India’s retail inflation in February fell to 3.61%, its lowest level in seven months, down from 4.26% in January. A significant drop in food prices contributed to this decline, with food inflation plunging from 5.97% in January to 3.75%. However, core inflation, which excludes food and fuel, continued to rise.
India’s industrial production index expanded by 5% in January, compared to 3.2% in December. Machinery manufacturing witnessed a 7.8% rise, while consumer durables production increased by 7.2%. However, FMCG manufacturing contracted by 0.2%.
The derivatives market saw Gift Nifty close at 22,556.50 on Wednesday, rising to 22,570 in early trade, indicating a positive opening for Indian markets.
European markets ended Wednesday in positive territory, driven by renewed hopes of a peace settlement in Ukraine and the resumption of US aid to the region. Meanwhile, the United States increased tariffs on steel and aluminium imports, prompting the European Union to announce reciprocal tariffs on US goods, effective from April.
In the US, annual retail inflation dropped to 2.8% in February, lower than market expectations and down from 3.0% in the previous month. Core inflation (excluding food and fuel) also fell to 3.1%. These figures have reassured investors that the country is not heading towards stagflation.
Technology stocks surged, with Tesla jumping 7.6% and Nvidia rising 6.43%, providing a significant boost to the market.
On Wednesday, the Dow Jones index declined by 82.55 points (-0.20%) to 41,350.93, while the S&P 500 gained 27.23 points (+0.49%) to 5,599.30. The Nasdaq Composite surged by 212.36 points (+1.22%) to close at 17,648.45.
US stock futures saw a slight decline this morning after a strong opening.
The Indian stock market opened with optimism but later declined as foreign brokerage reports warned of slowing growth and profits in IT companies, dragging IT stocks down by 2.91%. Major IT firms suffered losses exceeding 3%.
IndusInd Bank recovered from recent losses, closing 4.5% higher, following assurances from promoters about additional capital infusion. However, reports suggest that the Reserve Bank prefers a new Managing Director with a public sector banking background.
Hinduja Group’s financial stability raised concerns, as reports claimed that half of its stake in IndusInd Bank has been pledged to foreign banks, increasing risks if share prices decline. This could have repercussions for other Hinduja Group companies.
Sectors that ended in losses included Real Estate, PSU Banks, Metals, and Media, while Finance, Auto, Pharmaceuticals, Healthcare, and Oil & Gas showed gains.
On Wednesday:
Nifty fell by 27.40 points (-0.12%) to 22,470.50
Sensex declined by 72.56 points (-0.10%) to 74,029.76
Bank Nifty gained 202.70 points (+0.42%) to 48,056.66
Midcap index fell by 0.57% to 48,486.60
Smallcap index dropped by 0.21% to 15,044.35
Foreign investors sold ₹1,627.61 crore in the cash market, while domestic funds and financial institutions purchased ₹1,510.35 crore.
Nifty remains range-bound between 22,300 and 22,700.
If 22,700 is breached, Nifty may target 23,000.
If 22,300 breaks downward, it could fall to 21,800.
Key support levels: 22,360 and 22,210.
Key resistance levels: 22,550 and 22,610.
The Indian stock market will remain closed tomorrow (Friday) in observance of Holi.
The decline in US inflation and expectations of an interest rate cut have strengthened gold prices, supported by a weaker US dollar.
Gold closed at $2,934.90 per ounce, up $15.30
Early trading saw gold reaching $2,942 before settling at $2,938
Gold prices in Kerala rose by ₹360 per sovereign to ₹64,520 on Wednesday
A further increase could surpass the February 25 record of ₹64,600
Silver prices also rose, gaining $33.20 per ounce.
The dollar index increased slightly to 103.61, while the Indian rupee remained unchanged at ₹87.21 per USD. The Chinese yuan strengthened to 7.24 per USD, and the euro held steady at 1.09 per USD.
With recession fears easing, crude oil prices climbed:
Brent crude closed at $70.95 per barrel, up $1.39
WTI crude stood at $67.55
UAE’s Murban crude rose to $71.80
Bitcoin climbed to $83,550
Ethereum fell close to $1,900
Copper surged 1.31% to $9,765.60 per tonne
Aluminium rose 0.21% to $2,705.15
Nickel (+0.76%), Lead (+1.59%), Zinc (+2.16%), and Tin (+1.78%) all gained
Sensex 30 74,029.76 -0.10%
Nifty50 22,470.50 -0.12%
Bank Nifty 48,056.66+0.42%
Midcap100 48,486.60 -0.57%
Small Cap 100 15,044.35 -0.21%
Dow Jones 41,350.90 -0.20%
S&P 5599.30 +0.49%
Nasdaq 17,648.40 +1.22%
Dollar($) ₹87.21 ₹0.00
Dollar index 103.61 +0.19
Gold (ounce) $2934.90 +$15.30
Gold (sovereign) ₹64,520 +₹360
Crude (Brent) oil $70.95 +$01.39
