INDIAN STOCK INDICES JUMP ON GLOBAL CUES
Recovery in rupee, easing of food prices also help Sensex and Nifty to surge
MUMBAI: The benchmark S&P BSE Sensex reclaimed the 38,000 mark on Friday, supported by a recovery in the rupee and positive sentiments in global stock markets.
The NSE Nifty50 also surged and consumer durables stocks led the increase in the market.
The Indian rupee on Friday recovered after the recent slump and the rupee traded around 71.81 per US dollar, against the previous close of 72.19 per dollar.
Globally equity markets traded higher after reports said that the US and China may hold fresh talks on trade tariffs issue.
Further, the Wholesale Price Index for August, released on Friday, eased to 4.53 per cent from 5.09 per cent in July, which firmed up the domestic investor sentiment.
Index-wise, the wider Nifty50 on the National Stock Exchange closed at 11,515.20 points, higher by 145.30 points or 1.28 per cent from its previous close.
The S&P BSE Sensex, which had opened at 37,939.29 points, closed at 38,090.64 points, higher by 372.68 points or 0.99 per cent than the previous close of 37,717.96 points.
Sensex touched a high of 38,125.62 points and a low of 37,859.52 points during the day’s trade. The markets remained closed on Thursday on the occasion of a Hindu festival.
A massive fall in food prices and cost of primary articles eased India’s annual inflation rate based on wholesale prices to 4.53 per cent in August from a 5.09 per cent rise in July.
However, on a year-on-year (YOY) basis, the Wholesale Price Index (WPI) furnished by the Ministry of Commerce and Industry on Friday was still higher than 3.24 per cent reported for the corresponding period of 2017.
“Build up inflation rate in the financial year so far was 3.18 per cent compared to a build up rate of 1.41 per cent in the corresponding period of the previous year,” the Ministry statement said here.
On a sequential basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI’S total weightage, slipped by (-) 0.15 per cent, from an increase of 1.73 per cent in July.
Similarly, the prices of food articles dipped. The category has a weightage of 15.26 per cent in the WPI index. It deflated by (-) 4.04 per cent from a rise of (-) 2.16 per cent.
Interestingly, the cost of fuel and power category, which commands a 13.15 per cent weightage, increased at a slower pace of 17.73 per cent from a growth of 18.10 per cent.
However, expenses on manufactured products registered a rise of 4.43 per cent from 4.26 per cent.
Even as the country’s retail inflation cooled off in August, an October rate hike by the Reserve bank of India (RBI) is imminent, a SBI Ecowrap report said.
“Even though CPI (Consumer Price Index) inflation has cooled off, we believe October rate hike of 25 bps is imminent, but the question is whether the magnitude of rate hike could be even higher by 25 bps (say 50 bps),” the report said.
“A currency crisis by logic calls for a bigger rate intervention, but given that RBI is now an inflation targeting central bank, it will be really difficult to justify such action with inflation numbers continuing to be in 4-4.7 per cent range through current fiscal, with the downside at sub 3.5 per cent in November 2018”, it said.
A vendor at a vegetable market in Mumbai. Lower food prices ease India’s Wholesale Price Index in August.