Sensex Surges 449 Points, Rupee Rebounds Amid Easing Inflation

The Indian stock market opened higher on Tuesday, with the BSE Sensex gaining 449 points to reach 76,779 and the Nifty 50 climbing 141 points to 23,227 in early trade. The positive opening came amid easing inflation and recovering domestic equity markets, despite ongoing risks of foreign fund outflows.

The Indian rupee also rebounded, appreciating by 21 paise to 86.49 against the US dollar in early trading. This recovery followed the rupee’s steepest single-day fall in two years on Monday, when it plunged 66 paise to hit an all-time low of 86.70 against the greenback. Support for the rupee came from retreating crude oil prices, which dropped to $80.78 per barrel, and a weakening US dollar index, which fell 0.37% to 109.41.

Government data released on Monday revealed retail inflation had eased to a four-month low of 5.22% in December, primarily due to declining food prices. This marks the second consecutive month of declining inflation after it exceeded the Reserve Bank of India’s (RBI) tolerance limit of 6% in October. The improvement in inflation has raised hopes of a possible interest rate reduction in upcoming monetary policy reviews.

Despite these positive indicators, the rupee has experienced significant depreciation over the past two weeks, dropping more than Re 1 from its December 30 closing of 85.52. However, the combination of easing inflation and a recovering stock market offers a more optimistic outlook for the Indian economy.