India equity benchmarks rise as soft inflation data fuels RBI rate cut bets
The Nifty 50 closed 0.45% higher at 25,195.80 points and the BSE Sensex added 0.39% to 82,570.91.
The blue-chip indexes fell 1.7% in the past four sessions. All the 13 major sectors rose on the day. The broader mid- and small-caps added about 1% each.
The short-term outlook of the domestic equity market looks robust considering favourable headline inflation, robust monsoon and prospects of a demand revival, said G Chokkalingam, founder and head of research at Equinomics Research. Domestic annual retail inflation slowed to a more than six-year low of 2.10% in June, near the lower range of the Reserve Bank of India's tolerance band, as food prices continued to ease, making a case for further interest rate cuts. Nomura expects 25 bps cuts in each of the RBI's October and December policy meetings, and also expects banking system liquidity to be kept in a surplus for effective monetary policy transmission.
Equinomics' Chokkalingam said any adverse move on the US tariff front is the only key risk factor for Indian markets at the moment.
Investor focus will now be on US inflation data, due later in the day, to assess the Federal Reserve's future rate action.
Among individual stocks, Sun Pharmaceuticals rose 2.7%, as the launch of its anti-baldness drug Leqselvi in the US was expected to boost sales. Yes Bank gained 2.4% after Bloomberg News reported that Japan's Sumitomo Mitsui Financial Group is eyeing $1.1 billion investment in the private lender to buy an additional 5% stake.
Bucking the broader trend, HCLTech dropped 3.3% and was the biggest loser among Nifty 50 and IT companies after India's No. 3 IT exporter reported lower-than-expected quarterly profit and lowered its annual margin forecast.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
an hour ago
- Business Recorder
India, China agree to resume direct flights, boost business links
NEW DELHI: India and China agreed on Tuesday to resume direct flights and step up trade and investment flows as the neighbours rebuild ties damaged by a 2020 border clash. The Asian giants are cautiously strengthening ties against the backdrop of US President Donald Trump's unpredictable foreign policy, staging a series of high-level bilateral visits. The latest statements came at the end of Chinese Foreign Minister Wang Yi's two-day visit to New Delhi for the 24th round of talks with Indian National Security (NSA) Advisor Ajit Doval to resolve their decades old border dispute. The border talks covered issues related to pulling back troops both countries have amassed on their Himalayan border, delimitation of borders and boundary affairs, the Indian foreign ministry said, without elaborating. The talks appeared to have made no major breakthrough on those issues and Beijing said both countries agreed to meet again in China in 2026. But it also said the two countries would resume direct flights and boost trade and investment, along with smooth facilitation of visas. Direct flights have been suspended since the COVID-19 pandemic in 2020. No date was given for their resumption. 'Stable, predictable, constructive ties between India and China will contribute significantly to regional as well as global peace and prosperity,' Prime Minister Narendra Modi posted on X after meeting Wang. Modi is scheduled to travel to China at the end of this month to take part in the summit of the Shanghai Cooperation Organisation - his first visit to the country in more than seven years. TIBET DAM A readout from the Chinese foreign ministry said Wang told Doval that 'the stable and healthy development of China-India relations is in the fundamental interests of the two countries' people'.
Business Recorder
an hour ago
- Business Recorder
Current account back in the red
With remittances starting to dip, the current account has slipped back into deficit. The CAD stood at $254 million in July 2025 compared to a surplus of $355 million in the previous month. This $589 million swing is almost evenly split between a widening trade deficit and a decline in home remittances. Imports are rising, up 8 percent month-on-month and 11 percent year-on-year to $5.4 billion in July 2025. It marks the fifth time in the past seven months that imports have exceeded $5 billion. The 12-month average now stands close to $5 billion—a new norm that is likely to grow as non-oil imports pick up with modest economic recovery. Detailed numbers are awaited, but current trends clearly suggest a broad increase in import demand. With oil prices easing, the import bill may stay manageable, but any commodity price rebound triggered by external shocks could pressure the external account. Exports remain steady but insufficient to cover rising imports. Goods exports reached $2.7 billion in July, up 5 percent month-on-month and 16 percent year-on-year. However, exports are close to capacity. The rice windfall has passed, and textile exports show no immediate upside as the sector operates near full capacity. A potential positive aspect lies in Trump's tariffs: if Indian tariffs remain elevated at 50 percent, Pakistan could capture additional orders in home textiles. In garments and knitwear, however, Pakistan's main competitors—Vietnam and Bangladesh—face no significant tariff disadvantages. The US is also negotiating on value-addition criteria, which could benefit Pakistan, since its import reliance for re-exports is lower than that of its competitors. In the near term, though, exports are likely to hover around current levels. Services exports continue to perform well but remain too small to make a meaningful difference. Overall, the goods and services trade deficit widened to $2.7 billion, deteriorating 12 percent month-on-month and 8 percent year-on-year. The standout performer last year was home remittances, which hit a record $38.3 billion and helped the current account swing to surplus. In July, however, inflows fell to $3.2 billion, down 6 percent from the prior month. Informal discussions with banks suggest inflows will remain subdued in August as well. Last year's higher inflows partly reflected extraordinary efforts by banks to attract remittances to finance their import commitments, as the SBP often restricts dollar purchases from other banks. Some larger banks incurred losses of Rs5–10 billion in the first half of CY25 and are unwilling to bear such costs again. As a result, remittance growth is likely to remain muted, while rising imports will keep the current account in deficit, complicating the SBP's efforts to raise forex reserves above $17 billion in FY26. The June-end target of $14 billion last year was achieved, with reserves reaching $14.5 billion, but they have since slipped slightly to $14.2 billion as the capital and financial accounts continue to show modest improvement.
Business Recorder
9 hours ago
- Business Recorder
US Treasury chief Bessent accuses India of profiteering on Russian oil purchases
WASHINGTON: U.S. Treasury Secretary Scott Bessent on Tuesday accused India of profiteering from its sharply increased purchases of Russian oil during the war in Ukraine, saying Washington viewed the situation as unacceptable. Bessent told CNBC in an interview that Russian oil now accounted for 42% of India's total oil purchases, up from under 1% before the war, and contrasted that with longtime buyer China, whose Russian oil purchases had increased to 16% from 13%. 'India is just profiteering. They are reselling,' Bessent said. 'What I would call Indian arbitrage - buying cheap Russian oil, reselling it as product has just sprung up during the war - which is unacceptable,' he said. U.S. President Donald Trump this month announced an additional 25% tariff on Indian goods as a punishment for New Delhi's purchases of Russian oil, bringing the total additional tariffs announced since he took office to 50%. Trump has credited the Indian tariffs as piling pressure on Russian President Vladimir Putin to agree to work toward ending the war in Ukraine, but has stopped short of imposing similar tariffs on China over its purchases of Russian oil. US adviser Navarro says India's Russian crude buying has to stop Bessent, asked about the Trump administration's failure to move ahead with similar tariffs on China, said the situation was 'completely different' given that Beijing was a longtime buyer and had not engaged in the kind of 'arbitrage' done by India. U.S.-India relations have been strained by Trump's tariffs after months of forecasts by the U.S. president and other officials that they were close to reaching an agreement with Prime Minister Narendra Modi's government on a trade deal that would have lowered the tariff rate. India on Tuesday temporarily suspended an 11% import duty on cotton until September 30, a move seen as a signal to Washington that New Delhi is willing to address U.S. concerns on agricultural tariffs. It came after the abrupt cancellation of a planned visit by U.S. trade negotiators to New Delhi from August 25-29.
