The BSE Sensex set a fresh all-time high of 89,400 on Thursday, while the Nifty 50 crossed the 27,200 level for the first time, as foreign portfolio investors resumed net buying for the first time in seven sessions and a softer-than-expected April core CPI release lifted Reserve Bank of India rate-cut expectations. Year-to-date Indian equity gains now stand at 12.4%, the second-strongest performance among major Asian benchmarks behind Hong Kong's Hang Seng.
Foreign portfolio investors net purchased INR 4,820 crore (approximately $580 million) of Indian equities on Thursday, breaking a seven-session selling streak that totaled INR 28,400 crore of outflows. Domestic mutual fund inflows continued at the strong run-rate of approximately INR 18,000 crore in April per association data. Domestic insurers added another INR 9,200 crore, supporting the rally even when foreigners were net sellers earlier in the month.
CPI Cools Below Forecasts
India's April consumer price inflation released after the close came in at 3.8% year-on-year — below the 4.1% consensus and the lowest reading since June 2024. Core CPI, which strips out food and fuel, eased to 3.4% from 3.6% in March. The print is now well within the RBI's tolerance band of 2-6% and below the 4% target, opening the door for further policy easing at the next monetary policy committee meeting on June 5-7.
Overnight-index swap markets are now pricing in a 76% probability of a 25 basis-point cut in June, up from 41% before the CPI release. The current repo rate stands at 5.50% after the April 50 basis-point reduction. Governor Sanjay Malhotra has telegraphed a "carefully calibrated" approach, but several committee members — including external member Saugata Bhattacharya — have voted in favor of more aggressive easing on the back of slowing growth indicators.
Sector Rotation and Stock Standouts
Banking and rate-sensitive sectors led: HDFC Bank (HDB) ADRs added 2.4%, ICICI Bank (IBN) +3.1%, State Bank of India +1.9%. Rate-sensitive housing finance: Bajaj Finance +2.8%. Information technology continued the positive tape from Mag 4 read-through: Infosys (