Sensex, Nifty Rally as Inflation Cools to Multi-Year Low

The Indian stock market broke its losing streak with a decisive rally on Wednesday, August 13, 2025, as cooling domestic inflation significantly boosted investor sentiment.

The benchmark indices closed with substantial gains, reflecting broad-based buying activity. The BSE Sensex settled at 80,539.91, up 304.32 points (0.38%), while the NSE Nifty 50 climbed 131.95 points (0.54%) to close at 24,619.35. The positive momentum extended to the broader market, with mid-cap and small-cap indices also finishing in the green.

Cooling Inflation: The Primary Catalyst

The key catalyst for the day’s rally was the release of India’s retail inflation data for July. The Consumer Price Index (CPI) fell to 1.55%, a multi-year low and the ninth consecutive month of decline. This figure, the lowest since June 2017, has intensified expectations that the Reserve Bank of India (RBI) may consider an interest rate cut in its upcoming monetary policy meetings to stimulate economic growth.

Lower interest rates are generally bullish for the stock market. They reduce borrowing costs for corporations, which can enhance profitability, and make equity investments more attractive compared to fixed-income assets, potentially channelling more capital into stocks.

Broad-Based Gains and Sectoral Highlights

Market breadth was firmly positive, with advancing stocks outnumbering declining ones on the NSE. On the sectoral front, Nifty Healthcare, Nifty Metal, and Nifty Auto were among the top performers, witnessing significant buying interest. Conversely, sectors like Nifty FMCG and Nifty PSU Bank experienced some profit booking.

Among the top gainers on the Nifty 50 were Apollo Hospitals (which surged 8.20%), Hindalco, and Dr. Reddy’s Labs. On the losing side, IndusInd Bank, Adani Ports, and ITC were the primary laggards.

The positive sentiment was also underpinned by stable global cues. However, market participants are closely monitoring ongoing trade negotiations between India and the US, as well as diplomatic talks between the US and Russia, which could influence market direction.

Key Factors for Investors to Monitor

Looking ahead, retail investors should keep a close watch on several factors that could impact the market:

• Global Cues: Developments from the upcoming US-Russia discussions and any news regarding India-US trade relations will be critical.
• Institutional Activity: The flow of funds from Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) remains a key sentiment indicator. In the previous session on Tuesday, FIIs were net sellers of shares worth ₹3,398 crore, while DIIs were net buyers at ₹3,508 crore.
• Corporate Earnings: The ongoing quarterly earnings season will continue to be a primary driver for individual stock performance.
• Technical Levels: For the Nifty 50, the 24,400-24,600 range is a crucial technical zone. A decisive breakout on either side could set the near-term trend for the index.

While the sharp drop in inflation is a significant positive for the Indian economy and equity markets, investors should remain diligent. Always conduct thorough research and make investment decisions that align with your personal risk appetite and financial goals.

This article is for informational purposes only and does not constitute investment advice. Please consult with a financial advisor before making any investment decisions.