Indian shares extend Fed rate-fueled rebound; inflation data eyed

Indian shares advanced on Friday, building on last session’s Fed rate cut-led rebound, while investors awaited domestic inflation data due later in the day.

The Nifty 50 rose 0.41% to 26,005.50 and the BSE Sensex added 0.42% to 85,166.16 as of 10:04 a.m. IST.

Both the indexes gained about 0.5% each on Thursday in a broad-based rebound after a three-session slide.

On the day, fourteen of the 16 major sectors logged gains. Small-caps and mid-capsrose 0.8% each.

The rupee, however, remained under pressure, sliding to a record low against the U.S. dollar, with sentiment bogged down by the absence of a U.S.-India trade deal.

Meanwhile, Indian Prime Minister Narendra Modi said he spoke with U.S. President Donald Trump by phone on Thursday, as New Delhi seeks relief from the 50% U.S. tariffs on some of its key exports.

“While the sentiment remains supported by global stability following the recent Fed rate cut, foreign fund outflows and rupee weakness keep traders somewhat cautious,” said Aakash Shah, technical research analyst at Choice Equity Broking.

Given this, the interplay between buying the dips and profit-taking near record levels will keep markets range-bound in the near-term, Shah said.

Other Asian markets rose 0.6%, tracking Wall Street’s overnight gains after the Fed cut rates and offered a less hawkish policy outlook than expected.

Among individual stocks, Larsen & Toubro gained 2.3% after Goldman Sachs upgraded the stock to “buy” from “neutral” and raised its price target to a Street-high of 5,000 rupees, implying an upside of 25.3%.

Thermax rose 4% after Kotak Institutional Equities upgraded the stock to “buy” from “add”, citing potential margin improvement in the coming quarters and attractive valuations.

Investors are awaiting the domestic inflation reading for November, due after market hours. Retail inflation is likely to have risen modestly in November after slipping to a record low in October, a Reuters poll of economists showed.