Markets bounce back in early trade as inflation cools to 6 year low in April

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| Photo Credit: PTI

Equity benchmark indices Sensex and Nifty rebounded in early trade on Wednesday (May 14, 2025) as retail inflation eased to a nearly six-year low of 3.16% in April, creating enough room for the Reserve Bank to go for another round of rate cuts in the June monetary policy review.

Also, a cooling U.S. April inflation data added to the positive trend in the equity markets.

The 30-share BSE benchmark gauge Sensex climbed 281.43 points to 81,429.65 in early trade. The NSE Nifty went up by 96.65 points to 24,675.

From the Sensex firms, Tata Steel, Bharti Airtel, Eternal, Tech Mahindra, Infosys, Mahindra & Mahindra, Bajaj Finserv and Reliance Industries were the major gainers.

Telecom operator Bharti Airtel climbed over 2% after it posted about a five-fold jump in consolidated net profit to ₹11,022 crore in the March 2025 quarter, mainly due to the tariff hike impact and one-time gain on tax benefits.

However, Tata Motors, Asian Paints, Nestle and IndusInd Bank were among the laggards.

Tata Motors dipped over 1% after the firm reported a 51% decline in consolidated net profit to ₹8,556 crore for the March quarter, hit by lower volumes and operating leverage.

“A strong tailwind for the Indian market is the sharp dip in April CPI inflation to 3.16%. This leaves enough room for the MPC to cut rates thrice more in this cutting cycle. This is positive for the market in general and rate sensitives in particular,” V.K. Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

Retail inflation eased to a nearly six-year low of 3.16% in April mainly due to subdued prices of vegetables, fruits, pulses, and other protein-rich items, creating enough room for the Reserve Bank to go for another round of rate cut in the June monetary policy review.

The Consumer Price Index (CPI) based inflation was 3.34% in March and 4.83% in April 2024. It was 3.15% in July 2019.

“These developments (India, US inflation data) are likely to boost investor sentiment. In addition, easing trade tensions between the US and China, as well as a reduction in geopolitical frictions between India and Pakistan, are supportive of a favorable market environment,” Vikas Jain, Head of Research at Reliance Securities, said in his pre-open market quote.

In Asian markets, South Korea’s Kospi, Shanghai’s SSE Composite index and Hong Kong’s Hang Seng were trading higher while Japan’s Nikkei 225 index quoted lower.

U.S. markets ended mostly higher on Tuesday (May 13, 2025).

Global oil benchmark Brent crude dipped 0.57% to $66.25 a barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹476.86 crore on Tuesday (May 13, 2025), according to exchange data.

On Tuesday (May 13, 2025), the Sensex tanked 1,281.68 points or 1.55% to settle at 81,148.22. The broader Nifty of NSE dropped 346.35 points or 1.39% to 24,578.35.