Indian shares boosted by banks, IT stocks

Indian shares ended higher on Tuesday, led by IT and banking stocks, after retail inflation came within the central bank’s tolerance limit for the first time in 10 months, while investors looked ahead to the US inflation report.

The Nifty 50 index (.NSEI) closed 0.60% up at 18,608, and the S&P BSE Sensex (.BSESN) settled 0.65% higher at 62,533.30.

India’s annual retail inflation eased to 5.88% in November from 6.77% in October, government data showed on Monday, reported Reuters.

Retail inflation had been above the upper end of the Reserve Bank of India’s 2%-6% tolerance band since January, prompting the central bank to raise rates by 225 basis points since May.

Neeraj Dewan, director of Quantum Securities, said that markets are awaiting the U.S. inflation data and Fed rate decision before making a decisive upward move after a few listless sessions.

The US consumer prices report, due at 7:00 p.m. IST, will be closely watched for clues on the Federal Reserve’s interest rate-hike trajectory. The Fed is largely expected to increase its key interest rate by 50 basis points at its policy meeting on Wednesday, down from the four consecutive 75 bps increases.