Sensex, Nifty rebound after 6-day losing streak: What's driving recovery?
What's the story
The Indian stock market is staging a comeback today with both Sensex and Nifty indices trading on a positive note.
This comes after a six-day downward trend which witnessed massive losses.
The Sensex had gained over 400 points to 76,580 while the Nifty was up 125 points to 23,170 at around 1:20pm.
Most sectoral indices are trading in the green today, reflecting a positive shift in the market. The Nifty Pharma index has emerged as the top performer this morning.
International impact
Global market trends influence Indian stock market recovery
The Indian stock market's recovery is partly driven by global trends. Reports of possible peace talks between Russia and Ukraine have greatly improved investor sentiment.
This has resulted in a rise in global equities with S&P 500 futures gaining 0.2%, Nasdaq futures rising by 0.4%, and European stock futures climbing by 1%.
Asian stocks have followed suit, further boosting India's market recovery.
Inflation impact
US inflation shock and Fed rate expectations steady
Despite a higher-than-expected US inflation rate, global equities have rebounded as investors had already factored in a prolonged pause on US Federal Reserve interest rates.
The US consumer price index (CPI) rose 0.5% in January, its highest increase since August 2023.
However, analysts suggest that markets were already positioned for a prolonged Fed rate hold, limiting the downside impact on equities.
Inflation drop
India's retail inflation falls, boosting RBI rate cut hopes
India's retail inflation fell to a five-month low of 4.31% in January, lower than economists' estimate of 4.6%.
The sharp decline, driven by a drop in food price inflation, strengthens expectations that the Reserve Bank of India (RBI) may cut rates as early as April.
"Inflation is expected to print between 4-4.5% over the next two months," said Sakshi Gupta, principal economist at HDFC Bank.
Market factors
Falling crude oil prices and Chinese market stability
Crude oil prices continued their downward trend with Brent crude slipping to $74.66 per barrel and US crude down to $70.88 per barrel.
This decline comes as a positive sign for India, a major oil importer, as it eases inflationary pressures and reduces fiscal risks.
The stabilization of Chinese markets also contributed to the Indian stock market's recovery today.