Sensex Recoups Ground, Nifty Reclaims Key Level as Markets Find Support Amid US Inflation and Oil Dip

Sensex Recoups Ground, Nifty Reclaims Key Level as Markets Find Support Amid US Inflation and Oil Dip​

Equity benchmarks Sensex and Nifty managed to recover significant portions of their early losses on Thursday, fueled by supportive global cues and positive inflation data from the United States. The market activity reflected a shift in sentiment following earlier dips, with indices finding footing through buying at lower levels.

Recovery Dynamics: How Indices Climbed from Early Slump​

In early trading, the Sensex saw a decline of 300.46 points, or 0.38 per cent, settling at 77,665.89. Meanwhile, Nifty experienced a similar downturn, falling 124.55 points, or 0.5 per cent, to 24,311.40.

As the day progressed and buying activity picked up at lower levels, the market showed signs of resilience. The Sensex finished trading at 78,015.31, marking a gain of 48.96 points, or 0.063 per cent. Nifty was recorded at 24,406.55, rising by 29.40 points, or 0.12 per cent, around the 12:15 pm mark.

Catalysts Driving Market Sentiment Recovery​

Several factors provided a strong foundation for the market's mid-day recovery. The sentiment shift was primarily linked to US inflation data and movements in global commodity prices, both of which reduced immediate pressure on equity investors.

In-Line US Inflation Eases Federal Reserve Concerns​

US consumer prices rose by 0.1 per cent in July, meeting expectations. This in-line data dampened fears that the Federal Reserve would be compelled to increase interest rates again in the near term. The supportive news lessened the case for aggressive monetary tightening globally.

Crude Oil Price Decline Offers Relief​

Global energy costs provided a degree of relief, with Brent crude trading 0.82 per cent lower at USD 88.25 per barrel. Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, noted that while the modest drop below USD 89 per barrel was positive, "the unresolved situation in the Strait of Hormuz continues to keep the geopolitical risk premium in energy markets elevated."

Global Cues and Asian Market Performance​

Positive sentiment permeated global trading following the benign US inflation print. This translated into a relief rally across various Asian stock markets this morning.

Asian peers showed strong performance, with indices including South Korea's Kospi, Japan's Nikkei 225, Shanghai's SSE Composite index, and Hong Kong's Hang Seng index all trading higher.

The positive global tone was partly attributed to a "spectacular near 5 per cent surge in South Korea's Kospi," according to the analyst, which triggered robust movement across regional markets. US markets had concluded mostly higher on Wednesday, providing further backing ahead of Thursday's session.