Benchmark stock market indices started Thursday’s session on a positive note, driven by renewed optimism after the government released fresh inflation data, revealing that the Consumer Price Index (CPI) had dropped to a seven-month low of 3.75% in February. This marked a significant improvement, bringing inflation below the Reserve Bank of India's (RBI) target of 4%, fostering expectations of a potential rate cut in the upcoming Monetary Policy Committee (MPC) meeting scheduled for April.
The S&P BSE Sensex gained 71.85 points, reaching 74,101.61, while the NSE Nifty50 rose by 23.80 points to hit 22,494.30 during early trading at 9:20 AM. The market welcomed the softer inflation data alongside strong industrial output figures, as the Index of Industrial Production (IIP) surged to an eight-month high of 5.01% in January. This combination of falling inflation and robust industrial growth has created an encouraging backdrop for economic recovery and corporate performance, setting the stage for positive investor sentiment.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated that the market is navigating through a complex mix of strong domestic tailwinds and challenging global headwinds. He noted that India’s economic indicators appear resilient, with inflation easing and production output rising, fostering hopes that the RBI may soon consider lowering interest rates to further boost growth, lending, and industrial demand.
Despite the upbeat mood among large-cap stocks, the broader market showed some signs of weakness. The Nifty Midcap100 index fell by 0.41%, while the Nifty Smallcap100 index declined 0.83%, reflecting caution among investors in mid-sized and smaller companies. India VIX — an indicator of market volatility — dipped 0.98%, signaling lower short-term market volatility and a relatively calm trading environment.
Sector-wise, banking and metal stocks led the gainers, driven by the positive economic outlook. Bank of Baroda (BEL) surged 2.19%, followed by Tata Steel, which advanced 1.94%. Oil and Natural Gas Corporation (ONGC) climbed 1.85%, supported by stable crude prices and domestic energy demand. IndusInd Bank (INDUSINDBK) rose 1.70%, while Tech Mahindra (TECHM) inched up by 0.83%, reflecting optimism in the technology sector despite global headwinds.
However, several stocks faced losses. Shriram Finance (SHRIRAMFIN) led the decliners with a fall of 0.73%, while Sun Pharmaceutical Industries (SUNPHARMA) dropped 0.66%. Apollo Hospitals Enterprise (APOLLOHOSP) slipped 0.63%, and Trent declined 0.57%. Dr. Reddy’s Laboratories (DRREDDY) also fell 0.56%, driven by concerns over global pharmaceutical demand and pricing pressures.
Dr. Vijayakumar pointed out that, under normal circumstances, this mix of favorable domestic macroeconomic data would have fueled a more robust market rally. However, global uncertainty remains a significant constraint. He highlighted the escalating global trade tensions driven by former US President Donald Trump’s aggressive tariff policies. The recent imposition of a 25% tariff on steel imports to the US triggered immediate retaliation from the European Union, which imposed tariffs on $28 billion worth of American goods. Canada followed suit with tariffs on $20 billion of US exports, with China widely expected to announce its own countermeasures soon.
“The global trade war is creating a tough external environment, limiting the potential for sustained rallies in the Indian market despite strong domestic fundamentals,” Vijayakumar explained. He advised investors to focus on domestic consumption-driven sectors, which are likely to remain resilient amid global volatility. He emphasized that sectors like FMCG, healthcare, and financial services could offer safer bets in the current climate, especially as rising domestic demand supports these industries.
Looking ahead, market participants will closely monitor global developments, particularly updates on trade conflicts, which could influence foreign institutional investor (FII) flows and market sentiment. Domestically, attention will remain on corporate earnings, RBI policy signals, and ongoing reforms that may support India’s growth trajectory.
The market's ability to sustain gains could depend on whether buying momentum picks up in the midcap and smallcap segments or if global uncertainty continues to weigh on sentiment. Investors are also keeping an eye on foreign exchange rates, commodity prices, and geopolitical developments, all of which could sway the market’s direction in the coming days.
