Mumbai, July 15 (IANS): Hopes of a rate cut and expectations of importing cheaper oil from Iran after it signed a nuclear deal with the world powers cheered the Indian equity markets on Wednesday, with the 30-scrip sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) gaining more than 255 points during the late-afternoon trade session.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also made gains during the session under review. It was trading 70 points or 0.83 percent up at 8,524.10 points.
The Sensex of the S&P BSE, which opened at 28,022.14 points, was trading at 28,188.99 points (2.30 p.m.), up 256.09 points or 0.92 percent from the previous day's close at 27,932.90 points.
The Sensex so far touched a high of 28,218.37 points and a low of 27,986.48 points in the intra-day trade.
"There is still hope of a rate cut by the Reserve Bank of India (RBI). Both the Consumer Price Index (CPI) and Wholesale Price Index (WPI) have almost come inline with the earlier estimates. These factors coupled-with a good monsoon has renewed hopes of a rate cut in August," Anand James, co-head, technical research desk, Geojit BNP Paribas, told IANS.
On July 10, the Index of Industrial Production (IIP) showed a slow down in India's overall industrial production expansion to 2.7 percent for May - against 4.1 percent in April.
On Monday, official data showed that a rise in food and fuel prices propelled India's retail inflation to 5.40 percent in June from 5.01 percent in May.
However, On Tuesday, India's annual inflation rate based on wholesale prices continued in the negative territory in June, falling to (-)2.4 percent from (-)2.36 percent in May.
India Inc. is pinning its hopes on these data points in expectations of rate cut by the RBI.
The RBI had lowered its short-term lending rate by 25 basis points in its monetary policy review in June.
That time RBI Governor Raghuram Rajan said the central bank's next move will be data-dependent. It will also keep an eye on how monsoon progresses and the steps taken by the government to mitigate its negative effects, Rajan had added.
"Other factor for the healthy buying is the Iran nuclear deal. The deal is important for India as it can now import more oil from Iran on cheaper rates and increase its exports of pharmaceutical and other products to that country," James added.
Industry experts foresee oil prices to plunge-- as and when Iran resumes to export oil at the pre-sanction levels. The Middle East state is believed to have around 25-30 million barrels of oil ready for exports.
After Tuesday's massive volatility in Brent index stood at $58.51 and the West Texas Intermediate (WTI) gained to $53 per barrel on Wednesday. The WTI had fallen to $44 per barrel on Tuesday.
Tuesday's sharp fall in both WTI and Brent indices cheered the Indian equity markets markets.
Sector-wise, majority of the 12 sectoral indices of the S&P BSE were trading higher except for the consumer durables index.
The S&P BSE automobile index zoomed by 221.28 points, healthcare index augmented by 160.63 points, the information technology (IT) index jumped by 129.28 points, capital goods index was higher by 116.30 points and technology, entertainment and media (TECK) index was up by 61.48 points.
However, consumer durables index fell by 125.30 points.