Indian Markets Rebound as Inflation Eases

India’s key equity indices bounced back strongly following a four-day slide, supported by easing domestic inflation. The S&P BSE Sensex rose by around 317 points, while the Nifty resumed trading above the 25,150 mark. Investor sentiment found footing as June’s retail inflation declined to a six-year low, bolstering expectations of further rate easing by the Reserve Bank. This relief was visible across sectors; auto, pharma, consumer durables, and real estate stocks led the recovery, reflecting improved market confidence and anticipation of continued policy support.

Retail inflation softened largely due to slower food price increases, which took much of the pressure off headline inflation. This shift gave the RBI room to consider interest rate cuts, potentially unlocking a favorable credit environment. Financial stocks and infrastructure-linked companies responded well, with realty, lending and two-wheeler shares showing sharp gains. Analysts see this as a rotation toward domestically-oriented sectors likely to benefit from renewed economic activity and improved consumer sentiment.

Despite optimism, caution persists. IT stocks continue to lag amid global trade and demand challenges, tempering overall gains. Analysts warn that next moves by the RBI and global macro developments should guide portfolio decisions. Still, today's rebound reinforces the narrative that India's economic health is stabilizing, offering renewed footing for medium-term equity investors.