Indian Equities Close Higher on Inflation Hopes, Global Cues, Sensex up by 182 points, Nifty by 88.55 points

Indian benchmark indices, the Sensex and Nifty, ended Wednesday's session on a positive note, supported by softer inflation data both domestically and in the U.S., alongside easing global trade tensions. The Sensex settled 182.34 points higher at 81,330.56, while the Nifty closed 88.55 points higher above the 24,650 level at 24,666.90. The market saw broad-based gains, with 10 out of 13 major sectors advancing. The advance-decline ratio favoured buyers throughout the day.

Inflation Data Fuels Rate Cut Expectations

Cooling domestic inflation has raised expectations of potential rate cuts by the Reserve Bank of India (RBI). Wholesale price inflation (WPI) declined to 0.85% in April from 2.05% in March, primarily due to easing prices of food, fuel, and manufactured goods. Food articles experienced deflation of 0.86%, with vegetable prices seeing a sharp drop. Retail inflation reached a 5-year low of 3.16%, reinforcing the possibility of another RBI rate cut in its June policy review. Encouraging U.S. inflation data also contributed to the positive sentiment, easing concerns over a possible recession. The U.S. consumer price index (CPI) rose less than forecast in April, strengthening the case for Federal Reserve rate cuts. This also led to a weakening U.S. dollar.

India Emerges as Preferred Asian Market

A BofA survey indicates that India has displaced Japan as the most preferred equity market in Asia, with 42% of fund managers overweight on India, surpassing Japan's 39%. This shift is attributed to supply chain realignments and strong infrastructure and consumption themes. Investor sentiment on Asia is improving, with fewer expectations of economic and earnings slowdowns. However, CLSA cautioned that India's "safe haven" appeal could diminish if the U.S.-China trade ties continue to improve, potentially drawing flows back to Chinese markets.

Key Corporate Developments

Several companies were in focus following news and earnings announcements:

India's cabinet approved a new semiconductor plant joint venture between HCL Technologies and Foxconn in Uttar Pradesh, with an investment of ₹3,706 crore.

Tata Motors shares saw attention after its consolidated net profit dropped 51% year-on-year in Q4 FY25, though the results beat Street estimates. The decline was impacted by the absence of a large deferred tax credit and an exceptional item. The company also outlined a significant capital expenditure plan of ₹15,000 crore for FY26.

Raymond Ltd shares plunged 65% as the stock went ex-date following the demerger of its real estate arm, Raymond Realty.

Bharti Hexacom shares were in focus after reporting a more than twofold increase in Q4 PAT, primarily driven by recent tariff hikes.

KPI Green Energy shares jumped 6% after reporting a 142% surge in Q4 net profit.

Berger Paints also announced Q4 results, exceeding revenue and net profit estimates, with the stock rising 2%.

MTAR Technologies secured orders worth ₹34 crore in the clean energy and aerospace sectors.

Defence stocks, including Cochin Shipyard and Bharat Dynamics, rallied after the success of Operation Sindoor and PM Modi's support for the sector.

Market Trends and Flows

India VIX, the volatility index, eased over 5%. SBI Mutual Fund's top 10 stock holdings in April included HDFC Bank, ICICI Bank, and Reliance. JM Financial's new model portfolio is bullish on banks, infra, telecom, and oil & gas, favouring large caps, while being cautious on mid/small-caps, internet, pharma, cement, and consumers due to high valuations. Mutual funds were net buyers in April, buying stocks worth ₹17,000 crore. Top buys included Infosys, TCS, and Reliance, while top sells were ITC, Airtel, and ICICI Bank.

Global Market Performance

Globally, European shares traded flat after pausing on gains driven by the U.S.-China trade truce. Japan's Nikkei fell slightly on profit booking, breaking the Topix's 13-day winning streak. South Korean shares gained for the third straight day, led by tech stocks like Samsung Electronics and SK Hynix. Bitcoin also topped $103,000, and Ethereum jumped after the soft U.S. inflation data boosted hopes of Fed rate cuts.

MSCI Rejig

In the MSCI May 2025 review, Nykaa and Coromandel International were added to the MSCI India Index, part of the MSCI Global Standard Index. Additionally, 11 companies, including Tata Technologies and Godrej Agrovet, were added to the MSCI Global Smallcap Indexes, while 22 firms were removed.

Current Market Update

• The Sensex is trading at 81,331.07 up by 194.31 points or 0.24%.
• The NSE Nifty 50 is trading at 24,658.30 up by 81.15 points or 0.34%.

Top Gainers of the Market

Tata Steel (TATASTEEL)

• Opening Price: ₹151.00
• Current Market Price (LTP): ₹155.25
• Percentage Change: +3.89%
  Tata Steel led the gainers, rising 3.89%. The surge is attributed to robust quarterly results and a positive outlook on global steel demand. Improved realisations and volume growth, as well as optimism around China’s stimulus measures supporting commodity prices.

Bharat Electronics Ltd (BEL)

• Opening Price: ₹339.00
• Current Market Price (LTP): ₹342.80
• Percentage Change: +2.10%
  BEL advanced 2.10% following new defence contract wins and expectations of increased government spending in the defence sector. Brokerages have also cited BEL’s strong order book and operational efficiency as key drivers.

Shriram Finance (SHRIRAMFIN)

• Opening Price: ₹639.50
• Current Market Price (LTP): ₹646.00
• Percentage Change: +1.96%
  Shriram Finance gained 1.96% after reporting strong loan growth and improved asset quality in its recent quarterly update. The company’s focus on expanding its retail lending portfolio and positive management commentary have further boosted investor confidence.

Hindalco Industries (HINDALCO)

• Opening Price: ₹635.50
• Current Market Price (LTP): ₹645.20
• Percentage Change: +1.65%
  Hindalco rose 1.65% on the back of rising global aluminium prices and expectations of improved margins. The company’s recent capacity expansion and cost control measures have also supported the uptrend.

Oil and Natural Gas Corporation (ONGC)

• Opening Price: ₹241.16
• Current Market Price (LTP): ₹245.02
• Percentage Change: +1.60%
  ONGC climbed 1.60% as crude oil prices rebounded amid geopolitical tensions and supply concerns. The company is also benefiting from recent government policy support for domestic exploration and production.

Top Losers of the Market

Tata Motors (TATAMOTOR)

• Opening Price: ₹2,319.00
• Current Market Price (LTP): ₹2,287.00
• Percentage Change: -1.62%
  Tata Motors was the top loser, falling 1.79%. The decline is attributed to profit booking after a recent rally and concerns over margin pressures amid rising input costs. Also, the decline of 51% in company’s net profit has led to the decline in the share price.

Asian Paints (ASIANPAINT)

• Opening Price: ₹2,319.00
• Current Market Price (LTP): ₹2,287.00
• Percentage Change: -1.62%
  Asian Paints declined 1.62% as rising raw material prices, particularly crude-based inputs, continue to squeeze margins. Analysts have also flagged subdued demand in the decorative paints segment, impacting near-term earnings.

Cipla (CIPLA)

• Opening Price: ₹1,495.00
• Current Market Price (LTP): ₹1,495.60
• Percentage Change: -1.61%
  Cipla dropped 1.61% following regulatory headwinds in the US market and a cautious outlook on export growth. The pharmaceutical sector has also seen profit booking after a recent uptrend.

Power Grid Corporation (POWERGRID)

• Opening Price: ₹299.20
• Current Market Price (LTP): ₹296.00
• Percentage Change: -0.82%
  Power Grid fell 0.82% amid concerns over rising operational costs and subdued growth in transmission revenues. Recent analyst commentary also highlights regulatory uncertainties weighing on the sector.

Kotak Mahindra Bank (KOTAKBANK)

• Opening Price: ₹2,111.00
• Current Market Price (LTP): ₹2,104.00
• Percentage Change: -0.52%
  Kotak Mahindra Bank slipped 0.52%, with the decline linked to profit booking and sector-wide caution after mixed quarterly results from private banks. Investors are also monitoring asset quality trends closely.

Markets Open Higher Amid Mixed Global Cues

India’s benchmark indices opened on a positive note Wednesday, tracking mixed signals from global markets. At the opening bell, the BSE Sensex advanced 160.47 points, or 0.20%, to 81,308.69, while the Nifty50 gained 59.40 points, or 0.24%, to 24,637.75.

Corporate Earnings Momentum Slows

Underlying earnings for the Nifty50 index show signs of fatigue, with earnings per share (EPS) growth moderating in recent quarters.

As of Tuesday, 13 May 2025, the index EPS stood at ₹1,071.4, marking a 4.7% year-on-year increase - up from ₹1,023 in May 2024 and marginally higher than ₹1,066 recorded at the end of December 2024.

Rupee Strengthens on Easing Inflation

The Indian Rupee opened 21 paise stronger at 85.13 per US dollar, compared to Tuesday’s close of 85.34. Despite recent volatility and a 0.79% depreciation so far this month, sentiment improved after April CPI inflation eased to 3.16%, a near six-year low. The decline was largely driven by softening food prices amid a robust harvest, despite prevailing heatwave conditions.

Macro Tailwinds: Rate Cut Room Widens

With inflation cooling, analysts see room for up to three more rate cuts by the Reserve Bank of India in the current cycle. This offers a supportive backdrop for equities - particularly rate-sensitive sectors - as the Monetary Policy Committee (MPC) may now have more leeway to pivot towards growth.

Global Markets Cautiously Watch US-China Developments

Global equities remain choppy, adjusting to shifting macro narratives. The recent US-China deal marks an end to Trump-era tariff tensions, though the rise in US 10-year bond yields to 4.47% raises concerns over FII flows into emerging markets like India. There’s also a risk of portfolio reallocation towards undervalued Chinese equities, should investor appetite tilt in that direction.

Oil Rallies on Tariff Relief, Soft Inflation Print

Crude oil prices rose sharply for a second straight session on Tuesday.  Brent crude settled at $66.63, up $1.67 or 2.57%, while WTI crude gained $1.72 to finish at $63.67, marking a 2.78% increase. The rally was driven by a temporary rollback in the U.S.-China tariffs and a lighter-than-expected U.S. inflation report, which eased recession fears. The 90-day tariff truce has also lifted broader market risk appetite, supporting both equities and commodities.

US Inflation Cools; Recession Risks Diminish

Data from the U.S. Bureau of Labor Statistics showed the Consumer Price Index rose 2.3% year-on-year in April, the lowest annual increase in four years. The Core CPI, excluding food and energy, rose 2.8% YoY, matching consensus expectations. On a monthly basis, both headline and core inflation advanced 0.2%.

Wall Street analysts including JPMorgan Chase and Barclays have revised down their U.S. recession forecasts, citing the moderating inflation trend.

Dollar Weakens Ahead of PPI and Sentiment Data

The U.S. Dollar Index (DXY) hovered near 100.90 during Wednesday’s Asian session, remaining subdued for a second day. The Greenback softened following April’s cooler CPI print, as traders await further clarity from the upcoming Producer Price Index (PPI) and University of Michigan Consumer Sentiment Survey, both due later this week.

Gold Falls as Risk Sentiment Improves

Gold prices slipped in early trade on Wednesday, with MCX June futures down 0.45% to ₹93,230 per 10 grams at 9:10 AM IST. International bullion prices also declined as traders shifted toward risk assets amid progress in U.S.-China trade negotiations.

A 115 percentage-point reduction in mutual tariffs, agreed upon for a 90-day window, has dented demand for safe-haven assets. U.S. President Donald Trump signaled confidence that the tariffs will not return to previous levels, reinforcing optimism around a final trade pact.

India's Inflation Softens to Multi-Year Low

India’s retail inflation cooled to 3.16% in April, the lowest reading in over six years, according to the Ministry of Statistics and Programme Implementation. The steady decline - down from 3.34% in March and 4.83% a year ago - was driven by moderating food prices, despite heatwave pressures. The disinflationary trend aligns with the RBI’s narrative of a gradual return to its targeted inflation band, strengthening the case for further monetary easing.

Earnings Watch: Over 120 Firms Set to Report

A busy day on the corporate earnings calendar as 126 companies are slated to report Q4 and FY25 numbers today.

Key names on the docket include Hindustan Aeronautics (HAL), Lupin, Eicher Motors, Muthoot Finance, Tata Power, Hitachi Energy, Torrent Power, and Jubilant FoodWorks, which operates Domino’s Pizza, Popeyes, and Dunkin’ Donuts in India.

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