(Updates for morning trade)
By Bharath Rajeswaran and Vivek Kumar M
Dec 4 (Reuters) – India’s equity benchmarks inched higher on Thursday, recovering from a subdued start, as information technology stocks rose due to a depreciating local currency and the firming expectations of a U.S. rate cut next week.
The Nifty rose 0.38% to 26,084.25 and Sensex added 0.39% to 85,438.86 as of 10:32 a.m. IST.
The Indian rupee plunged to an all-time low against the dollar on Thursday on persistent foreign outflows.
Foreign portfolio investors sold Indian shares worth 32.07 billion rupees ($355.7 million) on Wednesday, per provisional data, in their fifth consecutive session of selling.
The rupee weakness and the expectations of a Federal Reserve rate cut next week boosted momentum in IT stocks, with the index rising 1.4%, extending its 0.8% gain on Wednesday.
A weak rupee helps IT companies, which earn a major share of their revenue from the United States, and a rate cut would support growth in the world’s largest economy and revive client spending.
Fourteen of the 16 major sectors logged gains. The broader small-caps and mid-caps rose 0.3% and 0.4%, respectively.
India’s largest liquefied natural gas importer Petronet LNG
3.2% after signing a 15-year binding term sheet for ethane unloading, storage and handling services.
The 50-stock Nifty has lost 0.9% in the last four sessions and the Sensex has shed 0.7%, after hitting record highs for the first time in 14 months last week.
Investors are focused on Reserve Bank of India’s policy call and tone, said Kranthi Bathini, director of equity strategy at Wealthmills Securities.
Rate-sensitives could rise if a cut materialises, but durable growth hinges on December-quarter earnings and progress on the U.S.-India trade deal, he said. Dovish moves from the RBI and Fed could spur a short-term “Santa rally”, he added.
The RBI decision is due on Friday, with robust economic growth and a weakening currency
about the need for a rate cut. A Reuters
conducted before the growth data projected a 25-basis-point reduction.
(Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Sumana Nandy, Mrigank Dhaniwala and Janane Venkatraman)
