Sensex, Nifty Edge Higher as Softer US and India CPI Boost Rate Cut Hopes

Market Gains Driven by Cooling Inflation and Robust Industrial Growth

Indian equity benchmarks Sensex and Nifty 50 opened higher on March 13, 2025, mirroring the optimism across global markets. The uptrend was fueled by softer-than-expected US inflation data and India’s CPI slipping below the RBI’s 4% target, bolstering hopes of monetary policy easing.

At 10:14 AM, the Sensex climbed 257.13 points or 0.35% to 74,286.89, while the Nifty 50 advanced 72.95 points or 0.32% to 22,543.45. Market breadth remained positive, with 1,894 stocks advancing, 1,220 declining, and 128 remaining unchanged.

Market Drivers: Softer Inflation and Strong Industrial Growth

• US Inflation Slows More Than Expected:

  • The latest US Consumer Price Index (CPI) data for February showed a 0.2% rise, bringing the annual inflation rate to 2.8%—below the Dow Jones estimates of 0.3% and 2.9%, respectively.
  • The core CPI, which excludes volatile food and energy prices, rose 0.2% for the month and 3.1% over the past year, also undershooting expectations.
  • The data raised optimism that the US Federal Reserve (Fed) may have more flexibility in easing interest rates in the coming months.
  • Investors have been closely tracking inflation trends amid concerns that Donald Trump’s potential tariff policies could fuel inflation, possibly forcing the Fed to keep rates elevated for longer.

• India’s Inflation at Seven-Month Low:

  • India’s CPI fell to 3.61% in February, well below Reuters’ forecast of 3.98%, marking the lowest inflation print in seven months.
  • The decline was primarily driven by falling vegetable prices, reinforcing expectations that the Reserve Bank of India (RBI) may consider rate cuts in its April policy meeting.
  • Industrial output surged 5% in January, significantly beating market expectations of 3.5%, indicating strong manufacturing momentum.
  • “This dual economic surprise—inflation cooling faster than expected while industrial production exceeds forecasts—creates an ideal macroeconomic setup to energize bullish market sentiment,” said Devarsh Vakil, Head of Prime Research at HDFC Securities.

Sectoral Performance: Mixed Trends in Broader Market

• Gaining Sectors:
  • Nifty Bank, Nifty FMCG, Nifty Realty, and Nifty Metal gained up to 0.3%, reflecting positive investor sentiment.
• Underperforming Sectors:
  • Nifty IT, Nifty Media, Nifty Pharma, and Nifty Auto indices saw declines of up to 0.6%, driven by concerns over global economic uncertainty and slower demand.
• Midcap and Smallcap Performance:
  • Nifty Midcap index fell 0.3%, while the Nifty Smallcap index dropped 0.7%, as investors remained cautious about valuation concerns in broader markets.

Top Stock Movers: Tata Steel, Adani Green Lead Gains

• Tata Steel (+2%)

  • Shares surged after international brokerage JPMorgan raised its price target to ₹180 per share, citing earnings growth potential in Tata Steel’s European business.

• Adani Green Energy (+4%)

  • Macquarie initiated coverage with an ‘Outperform’ rating and a price target of ₹1,200, suggesting a 40% upside.
  • The brokerage sees Adani Green’s EBITDA growing at 25% CAGR over the next five years, driven by expanding renewable energy capacity (targeting 50 GW by FY2030, up from 12 GW currently).

• ONGC, Bharat Electronics (Gainers)

  • Oil and energy stocks remained strong, tracking higher crude prices and improved demand outlook.

• Shriram Finance, Bajaj Auto, ITC (Losers)

  • Shriram Finance (-3.2%), Bajaj Auto (-2.8%), and ITC (-1.5%) were among the worst performers on the Nifty 50, weighed down by profit-booking and sector-specific headwinds.