Markets turn optimistic as inflation fears ease

Mumbai: Benchmark BSE Sensex rose by over 379 points while Nifty closed above the 17,800 level following gains in oil & gas, banking and auto shares on easing inflation concerns.

The 30-share BSE benchmark index advanced 379.43 points or 0.64 per cent to settle at 59,842.21, logging its third straight day of gains. During the day, it jumped 460.25 points or 0.77 per cent to 59,923.03. Extending its gaining streak to a sixth session in a row, the broader NSE Nifty climbed 127.10 points or 0.72 per cent to close at 17,825.25 as 42 of its constituents advanced.

"The easing of inflationary pressures has encouraged domestic investors to remain optimistic about the pace of economic recovery. Better-than-expected CPI numbers, aided by slower increase in food and fuel prices, may limit the pace of rate hikes by the RBI," said Vinod Nair, head (research) at Geojit Financial Services.

"Moderating domestic inflation level has raised expectations that interest rate hike by the central bank may slow down going ahead. While strong FII fund infusion has certainly bolstered the sentiment of investors," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.

Easing inflation concerns after the wholesale price-based inflation slowed down to a five-month low of 13.93 per cent in July and buying in index majors Reliance Industries and HDFC twins added to the momentum.

In the broader market, the BSE midcap and smallcap indices both climbed 1.03 per cent each. Sectorally, BSE auto jumped 2.57 per cent, followed by realty (2.03 per cent), oil & gas (1.76 per cent), consumer discretionary goods & services (1.58 per cent) and power (1.48 per cent). Telecom and metal were the laggards.