Indian shares rise as U.S. inflation data boosts Fed slowdown bets
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Indian shares ended higher on Wednesday, led by information technology and metal stocks, as cooler-than-expected U.S. inflation data boosted bets that the Federal Reserve will slow the pace of interest rate hikes.
The Nifty 50 index closed up 0.28% at 18,660.30, and the S&P BSE Sensex rose 0.23% to 62,677.91. Both the indexes had risen 0.5% during the session.
Data on Tuesday showed the U.S. consumer price index (CPI) rose 0.1% in November, after advancing 0.4% in October. Economists had forecast the CPI gaining 0.3%.
The U.S. data comes after India's retail inflation reading came in within the Reserve Bank of India's target range for the first time in 10 months.
"Markets will definitely cheer a moderation in rate hike cycle as well as the bottoming out of inflation," said Avinash Gorakshakar, head of research at Profitmart Securities.
A slightly dovish commentary from Fed Chair Jerome Powell could trigger a near-term bounce in Indian markets as well, Gorakshakar added.
The U.S. central bank is expected to raise interest rates by 50 basis points at the end of its two-day policy meeting on Wednesday. Traders are also expecting smaller 25 bps hikes in the first two meetings of 2023.
The Fed's policy decision is due at 00:30 a.m. IST on Thursday (1900 GMT), followed by a press conference with Powell.
The Nifty IT and Nifty Metal were among the top sectoral gainers, rising more than 1%.
The IT index snapped a seven-day losing streak on Tuesday.
"When you get corrections in IT stocks, you buy", said Neeraj Dewan, director at Quantum Securities.
The sector would not lose sheen for long-term investors irrespective of downbeat commentary from IT companies, Dewan said referring to HCL Technologies Ltd warnings of furloughs and spending cuts by U.S. clients.
Graphic: All sectoral indexes barring FMCG log gains https://www.reuters.com/graphics/SECTORAL-DEC14/DEC14-SECTORAL/mypmookmqpr/chart.png
The Nifty FMCG was the only sectoral loser, weighed by declines in consumer goods majors Nestle India and Colgate , which fell 1.6% and 4.30%, respectively.
