Sensex Rallies Over 850 Points, Tracking US Stocks Best Performance Since 2020

Indian equity benchmarks rose sharply on Friday, tracking the biggest rally in Wall Street stocks since 2020 after data showed US inflation eased to the lowest since January and renewed hopes the Federal Reserve moves away from its aggressive rate hike stance.

After falling for two straight days, the 30-share BSE Sensex index rose 855 points to 61,469.22, and the broader NSE Nifty-50 index opened in the green, reflecting a feverish risk-on rally in other Asian bourses.

A smaller-than-expected rise in US consumer prices fueled optimism that the Fed will slow its aggressive pace of interest rate hikes, pushing Asian markets to surge higher on Friday, while the dollar suffered significant losses.

“It’s something the market had been waiting for a long time,” Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital, told Reuters. “There was a lot of money sitting on the sidelines.”

Overnight, the S&P 500 and Nasdaq notched up their biggest daily percentage gains in over 2-1/2 years on the inflation data.

According to Rodrigo Catril, Senior Currency Strategist at National Australia Bank in Sydney, the case is now strengthening for the Fed to moderate its aggressive stance after four consecutive 75 basis-point interest rate hikes to control decades-high inflation.