Indian Markets Start Week Cautiously On Inflation Data And Fed Rate Cut Hopes

Indian benchmark indices opened largely flat on Monday, with a slight upward bias, supported by encouraging domestic inflation figures and mounting expectations of a US Federal Reserve rate cut.

At 9.30 AM, the Sensex edged higher by 4.5 points, or 0.005 per cent, to 81,909. The Nifty gained 4.15 points, or 0.017 per cent, to reach 25,118.

Broad-market indices outperformed the benchmarks, with the Nifty Midcap 100 rising 0.26 per cent and the Nifty Smallcap 100 climbing 0.53 per cent.

On the NSE Nifty 50 index, Bajaj Finance, Tata Motors, Hero Motocorp, and Bajaj Finserv emerged as the top gainers.

In contrast, Infosys Ltd, Tata Consultancy Services, Sun Pharmaceutical Industries, Dr Reddy’s Laboratories, and Shriram Finance Ltd. exerted downward pressure on the index.

Among sectoral indices, Nifty Realty led the gains with a 1.19 per cent rise. Nifty PSU Bank (up 0.39 per cent) and Nifty Auto (up 0.38 per cent) also performed well, while Nifty Pharma recorded the largest decline, down 0.78 per cent.

Government data revealed that inflation cooled to 2.07 per cent in August, significantly below the Reserve Bank of India’s projected 3.1 per cent.

Analyst Outlook

Analysts noted that Indian equities, which have recently lagged behind global markets, now appear attractively valued.

Positive drivers such as ongoing GST reforms, expectations of a Fed rate cut, and improving US–India trade relations are likely to further support market momentum.

Last week, Nifty 50 posted its eighth consecutive weekly gain, closing above the key 25,100 mark for the first time since July.

This represented its longest winning streak in a year and the largest weekly advance in nearly three months.

“Nifty has been gradually taking out the crucial resistances and on the weekly chart, the Nifty has confirmed a pattern of higher tops and higher bottoms, which is an encouraging sign for a sustained positional bullish trend,” stated Devarsh Vakil, Head of Prime Research at HDFC Securities.

He further added that Nifty could test the next resistance at 25,250, with 24,900 likely serving as support.

Major US indices posted strong weekly gains, finishing near record highs.

The Nasdaq rose 2.0 per cent, the S&P 500 climbed 1.6 per cent, and the Dow advanced 1.0 per cent, marking the strongest week since early August.

Asian markets also showed strength during the morning session.

China’s Shanghai index gained 0.22 per cent, Shenzhen added 1.07 per cent, Japan’s Nikkei rose 0.89 per cent, Hong Kong’s Hang Seng increased 0.32 per cent, and South Korea’s Kospi edged up 0.52 per cent.

Analysts noted that US markets are now pricing in a 96.4 per cent likelihood of a 25-basis-point rate cut on 17 September, with further reductions anticipated through the end of the year.

Softer labour data and persistent inflation are supporting this dovish shift, boosting demand for equities and cryptocurrencies.

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