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The Indian stock market ended Tuesday's trading session higher, snapping a four-day losing streak, as expectations of another rate cut by the RBI grew following a decline in CPI inflation to 2.10% in June — the lowest reading since January 2019. This rekindled optimism in the market, particularly in rate-sensitive stocks.

Amid strong support from financials and the auto pack, the Nifty 50 ended the session with a gain of 0.55% at 25,220 points, while the S&P BSE Sensex closed at 82,509 — up 256 points or 0.31% from the previous close. The broader market posted even stronger gains, with both the Nifty Midcap 100 and Nifty Smallcap 100 rising 1% each.

Retail inflation, which declined to a more than six-year low of 2.1% in June, is nearing the RBI's comfort zone, driven by subdued prices of food items — including vegetables — due to widespread monsoon rainfall.

The Reserve Bank, which is tasked with keeping inflation at 4% (with a margin of 2% on either side), has cumulatively reduced the key short-term lending rate by 100 basis points since February, in response to the ongoing decline in retail inflation.

Meanwhile, major global markets, including the U.S., are not reacting negatively to Donald Trump’s ongoing tariff threats, as investors view them as bargaining tactics aimed at securing better trade deals, and also they speculate the levies won’t significantly harm the US economy and company earnings. 

(more to come)

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