Indian Stock Market Rises as Inflation Hits Eight-Year Low
Market Overview
Mumbai, Aug 13: The Indian stock market closed positively on Wednesday, buoyed by a significant drop in the consumer price index (CPI), which reached its lowest point in eight years, alongside robust buying in midcap stocks.
In July, India's inflation rate, as measured by the CPI, fell to 1.55%, driven by a decrease in food prices. This marks the lowest year-on-year retail inflation since June 2017.
The Sensex finished at 80,539.91, gaining 304 points or 0.38%. The 30-share index opened higher at 80,492.17, compared to the previous session's close of 80,235.59, thanks to the encouraging inflation figures. The index remained stable with selective buying in sectors such as auto and metal.
Nifty concluded at 24,619.35, up by 131.95 points or 0.54%.
"The Indian equity market showed widespread optimism as CPI reached an eight-year low, raising expectations for a rebound in discretionary spending, particularly in the auto and metal sectors. Midcaps outperformed, indicating strong investor interest. Globally, sentiment improved due to the extension of China's tariff deadline and declining oil prices," stated Vinod Nair, Head of Research at Geojit Investments Limited.
Despite uncertainties surrounding Trump's trade policies and global risks, India's growth-inflation dynamics appear favorable for FY26, although there is a slight risk of a downgrade based on tariff developments. The upcoming Trump-Putin meeting on August 15 is also anticipated, he added.
Among the top gainers in the Sensex were BEL, Eternal, Mahindra and Mahindra, Kotak Bank, Power Grid, Tata Motors, Bharti Airtel, Bajaj Finance, Sun Pharma, Asian Paint, and Trent. Conversely, ITC, Ultratech Cement, and Titan saw declines.
Most sectoral indices reflected positive market sentiment. Nifty Fin Services rose by 103 points or 0.39%, Nifty Bank increased by 137 points or 0.25%, and Nifty Auto surged by 266 points or 1.12%. Nifty IT and Nifty FMCG remained relatively unchanged.
Broader indices also performed well, with midcap stocks drawing significant investor interest. Nifty Next 50 climbed by 398 points or 0.60%, Nifty 100 rose by 137 points or 0.25%, Nifty Midcap 100 increased by 356 points or 0.63%, and Nifty Small Cap 100 finished 115 points or 0.66% higher.
The rupee traded strongly at 87.51, appreciating by 0.23 paise, fueled by optimism regarding potential positive developments in the Russia-Ukraine conflict, as US President Trump and Russian President Putin are scheduled to meet on August 15, according to Jateen Trivedi of LKP Securities.
The softer CPI data from both India and the US also contributed to positive sentiment. The rupee is expected to fluctuate within the range of 87.25–88.00, Trivedi noted.