BENGALURU: Indian shares ended higher on Wednesday, led by information technology and metal stocks, as cooler-than-expected U.S. inflation data boosted bets that the Federal Reserve will slow the pace of interest rate hikes.
The Nifty 50 index closed up 0.28% at 18,660.30, and the S&P BSE Sensex rose 0.23% to 62,677.91. Both the indexes had risen 0.5% during the session.
Data on Tuesday showed the U.S. consumer price index (CPI) rose 0.1% in November, after advancing 0.4% in October. Economists had forecast the CPI gaining 0.3%.
The U.S. data comes after India’s retail inflation reading came in within the Reserve Bank of India’s target range for the first time in 10 months.
“Markets will definitely cheer a moderation in rate hike cycle as well as the bottoming out of inflation,” said Avinash Gorakshakar, head of research at Profitmart Securities.
A slightly dovish commentary from Fed Chair Jerome Powell could trigger a near-term bounce in Indian markets as well, Gorakshakar added.
The U.S. central bank is expected to raise interest rates by 50 basis points at the end of its two-day policy meeting on Wednesday. Traders are also expecting smaller 25 bps hikes in the first two meetings of 2023.
The Fed’s policy decision is due at 00:30 a.m. IST on Thursday (1900 GMT), followed by a press conference with Powell.
Indian shares boosted by banks, IT stocks
The Nifty IT and Nifty Metal were among the top sectoral gainers, rising more than 1%.
The IT index snapped a seven-day losing streak on Tuesday.
“When you get corrections in IT stocks, you buy”, said Neeraj Dewan, director at Quantum Securities.
The sector would not lose sheen for long-term investors irrespective of downbeat commentary from IT companies, Dewan said referring to HCL Technologies Ltd warnings of furloughs and spending cuts by U.S. clients.
The Nifty FMCG was the only sectoral loser, weighed by declines in consumer goods majors Nestle India and Colgate, which fell 1.6% and 4.30%, respectively.
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