India’s benchmark indexes ended higher on Wednesday, helped by a rise in information technology stocks on easing U.S. recession fears and in metals companies as the U.S. dollar weakened.
The Nifty 50 rose 0.36% to 24,666.90 and the BSE Sensex gained 0.22% to 81,330.56. They had risen about 0.7% earlier, before trimming gains.
“There will be instances of profit taking in the very near term as hot FPI (foreign portfolio investors) money is likely to move to China due to the U.S.-China trade truce,” said Narendra Solanki, head of research at Anand Rathi.
Financials, which have relatively higher FPI ownership than other sectors, dropped 0.23% on the day.
Still, ten of the 13 major sectors advanced on the day.
The overall outlook for domestic markets remains positive, as cooling domestic inflation will allow the central bank to ease interest rates further, and that, in turn, will boost both economic growth and corporate profits, Solanki said.
India’s retail inflation slowed to a near six-year low on Tuesday.
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IT companies, which get a significant chunk of their revenue from the United States, gained 1.34%.
The low probability of a U.S. recession due to easing trade worries makes IT a good play as valuations are reasonable, said Jaykrishna Gandhi, head of business development of institutional equities at Emkay Global Financial Services.
A drop in the dollar due to benign U.S. inflation data and easing trade tensions also boosted metal stocks by 2.46%.
Tata Steel surged 3.93% with multiple brokerages highlighting strong volume growth and cost optimisation as key positives for the company.
The broader small-cap and mid-cap indexes rose 1.44% and 1.11% each.
Anand Rathi’s Solanki said that was mostly as certain key constituents gained after posting upbeat results.
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