By Bharath Rajeswaran and Indranil Sarkar
(Reuters) – Indian shares rose on Thursday, tracking other Asian peers, after underlying U.S. inflation softened in December, boosting the likelihood of further rate cuts by the Federal Reserve.
The Nifty 50 was up 0.35% at 23,296.7 points as of 10:15 a.m. IST, while the BSE Sensex added 0.3% to 76,955.96.
Eleven of the 13 major sectors advanced.
The broader, more domestically-focussed smallcaps and midcaps jumped about 1.5% each on the day.
Both indexes have largely underperformed the benchmarks so far this year, losing 6% and 4.4%, respectively, compared to a 1.25% drop in the Nifty 50.
They have, however, pared some of their losses in the last three sessions, with analysts attributing the reason to a technical rebound.
Other Asian markets also advanced on the day, with the MSCI Asia ex-Japan index gaining 1.2%, after data on Wednesday showed that U.S. core inflation rose less than expected last month, increasing the chances of more Fed rate cuts.
Lower U.S. rates make emerging markets, such as India, more attractive for foreign investment.
Traders are now pricing in two Fed rate reductions in 2025, compared to one after strong labour market figures last week, per the CME FedWatch Tool.
“Rising expectations of more U.S. rate cuts in 2025 has spurred a relief rally in emerging markets such as India,” VK Vijayakumar, chief investment strategist at Geojit Financial Services, said.
However, the sustainability of the rally will depend on a revival in quarterly corporate earnings and domestic economic growth, he said.
Among individual stocks, life insurer HDFC Life jumped 9.9%, the most among Nifty 50 stocks, after posting a higher December-quarter profit.
Engineering and technology services firm L&T Technology Services climbed 7% after raising its revenue forecast for fiscal year 2025.
(Reporting by Bharath Rajeswaran and Indranil Sarkar in Bengaluru; Editing by Sonia Cheema)
