By Bharath Rajeswaran
BENGALURU (Reuters) – Indian shares marched higher on Thursday, led by metals and IT stocks, on heightened expectations of a rise in foreign inflows into domestic equities after U.S. inflation data firmed bets of a 25-basis-point Federal Reserve rate cut.
The Nifty 50 index was up 0.51% at 25,045 points, while the S&P BSE Sensex gained 0.45% to 81,885.23, as of 9:23 a.m. IST.
All the 13 major sectors logged gains. IT companies, which earn a significant share of their revenue from the U.S., gained 0.9%.
U.S. consumer prices rose slightly in August, but underlying inflation showed some stickiness, according to data on Wednesday.
The odds a 25 bps rate cut by the Fed on Sept. 18 rose to 85% from 66% a day ago, while the case for a larger 50 bps reduction dwindled to 15% from 34%, according to CME FedWatch.
“A rate cut in the U.S. could boost growth, trigger foreign inflows and spur a rise in discretionary spending, helping domestic equities, in general, and information technology, pharmaceutical companies in particular,” said Saurabh Jain, assistant vice president of research of retail equities at SMC Global Securities.
The pharma index rose about 0.9%.
“However, a 25 bps cut is priced in and there are signs of some earnings moderation, so the gains from a Fed rate cut next week may be limited,” Jain said.
Asian markets opened higher on the day, with the MSCI Asia ex-Japan index rising 1.4%, while Wall Street equities logged gains overnight. [MKTS/GLOB]
Among other sectors, the metals index rose 1.5%, led by a 3% jump in Tata Steel after it signed a 500 million-pound grant funding agreement with the UK government.
The broader more domestically focussed small- and mid-caps rose 0.6% and 1%, respectively.
($1 = 83.9830 Indian rupees) (This story has been corrected to say Wednesday, not Thursday, in paragraph 4)
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema)
