Indian stocks trade firm ahead of May inflation data release

New Delhi [India], June 12 : After a largely stable Tuesday, Indian stock indices kicked off today's session on a positive note, continuing with the bull run trend of the past several sessions.
At the time of filing this report, Sensex and Nifty were 0.3 per cent up each and just below their all-time highs. Barring a couple of sectoral indices, all were in the green.
On Monday, the stock indices closed with a marginal dip after both indices touched an all-time high earlier in the day. The Sensex touched a record high of 77,079 and the Nifty 50 reached 23,411 points. Tuesday, they were largely steady.
"The 32 per cent decline in India VIX during the last 5 days indicates that the days of heightened volatility are over and the market has entered a consolidation phase. From now on the focus will be on fundamentals and news flows," said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
"Tonight's US inflation numbers and the Fed policy outcome will influence the direction of the global equity market."
Now, market participants await US May inflation data and the Federal Reserve's policy decision this week. Besides, they await India's inflation data and will actively monitor the policy decisions of the new government.
India's retail inflation eased to 4.83 per cent in April, down from 4.85 per cent in March. However, consumer food price inflation surged to 8.70 per cent from 8.52 per cent last month. The retail inflation in India though is in RBI's 2-6 per cent comfort level but is above the ideal 4 per cent scenario.
Nirmala Sitharaman, who has been again allocated the finance ministry portfolio, and her fresh decisions will be widely tracked. She will soon present the full Budget for 2024-25.
"US Fed commentary could provide direction to the market. So far investors are baking in 1 rate cut towards the end of the year; so any deviation from that could drive the market on either side," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
The US Federal Reserve, in its latest monetary policy meeting, voted to leave the key interest rate unchanged at 5.25-5.50 per cent, keeping the policy rate unchanged for the sixth straight time on the trot.
Coming back to Indian stock market's recent trend, Indian stocks witnessed a bloodbath on the day the Lok Sabha results were announced, where incumbent BJP performed below par and seemed it may fall short of exit poll predictions and the majority mark on its own. The national democratic alliance (NDA) though managed to get a comfortable majority, eventually.
Many investors booked their profits they accumulated from the gains they made a day after the exit poll predictions indicated comfortable majority for BJP.
All of the losses incurred on June 4 have been recovered over the next few sessions and the indices are again at their record highs. A smooth transition in the government formation seemed to have boosted market sentiments.