Retail inflation data for June released the previous day lifted sentiments on Indian stock markets, with the benchmark indices Sensex and Nifty hitting new highs on Thursday in early trade. The Sensex crossed 32,000 while the 50-scrip Nifty was trading 65 points higher at 9,881.
Top Sensex gainers were ITC, ICICI Bank and Axis Bank while stocks that were lifting the Nifty included ICICI Bank, ITC, Yes Bank and Indiabulls Housing Finance.
Retail inflation hit a new low of 1.54 percent for June, buoying hopes of a rate cut by the Reserve Bank of India (RBI) when it meets for its next monetary policy meeting. Though the data was accompanied in the form of weak factory output at 1.7 percent for May from 2.8 percent (revised) for April, according to Moneycontrol.com, it did not impact the bull run.
BusinessLine said in an analysis on Thursday that in the context of retail inflation falling to 1.54 percent, the "clamour for rate cuts has only gotten stronger."
Retail inflation dropped to a level not seen in many years, the ETEnergyworld said, citing chief economic advisor Arvind Subramanian. "The last time we saw such inflation -- according to slightly different CPI (IW) -- was in 1999 and before that in August 1978," he said.
In other news, TCS will be starting the Q1 results season by declaring its financial performance on Thursday, followed by Infosys the next day.
Staying with stock markets, Bloomberg said in a report that the party could be spoiled by the uncertainty prompted by the implementation of the goods and services tax (GST) from July 1. "We don't expect a great quarter looking at the impact of GST," the news agency quoted A K Prabhakar, head of research at IDBI Capital Market Services Ltd., as saying.
Citi analysts Surendra Goyal and Vijit Jain foresee a 2.4 percent drop in profit for Sensex companies.
Investors should be cautious of volatility in view of the quarterly results for quite some time, according to Deutsche Bank AG analysts. "We are entering a phase of no like-for-like results for the next six quarters. As a result, they "expect heightened volatility and hawk-like focus on management commentary," Bloomberg quoted Manoj Menon and Mihir P. Shah as writing in a note to clients.
