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Indian shares rebound as inflation worries ease, auto stocks gain

Indian shares rose 1% on Thursday, as a fall in crude oil prices alleviated concerns about imported inflation, and investors scooped up auto stocks after recent declines.

The NSE Nifty 50 index (.NSEI) rose 1% to 15,576.1 by 0515 GMT, while the S&P BSE Sensex (.BSESN) also climbed 1% to 52,340.81. Both indexes had fallen 1.4% on Wednesday.

“Commodity prices are lower, especially oil, and that is relatively good for India as it is largely an importer. This could positively impact domestic inflation,” said Narendra Solanki, head of research at Anand Rathi Investment Services.

Brent crude futures dropped more than 2% as investors recalibrated assessments of recession risks and fuel demand.

The U.S. Federal Reserve is not trying to engineer a recession to stop inflation, but is fully committed to bringing prices under control even if doing so risks a downturn, its chief Jerome Powell said on Wednesday. 

Meanwhile, Reserve Bank of India Deputy Governor Michael Patra wrote in the latest Monetary Policy Committee minutes that the central bank has no choice but to raise interest rates to keep a lid on inflation expectations. 

Among gainers on the Nifty, auto stocks (.NIFTYAUTO) jumped 3% in their biggest intraday rise in more than a month. Hero MotoCorp (HROM.NS) and Maruti Suzuki (MRTI.NS) climbed more than 4% each.

With valuations starting to become attractive, auto stocks have done well, especially with metal prices on the decline, said Anand Rathi Investment’s Solanki.

Financials also advanced, with the Nifty Bank index (.NSEBANK) up 1.7%.

Shares of Quess Corp (QUEC.NS) rose 4.1% after the company said it would buy all shares in unit Allsec Technologies (ALLS.NS) it does not own for 1.86 billion rupees ($23.77 mln). Allsec shares surged nearly 14% to hit their highest in more than two weeks.

Source By: Reuters