Markets rally as inflation cools to 2.1%: Nifty nears 25,200, auto and pharma lead gains
Benchmark indices broke their four-day losing streak on Tuesday, with the Nifty closing near the 25,200 mark, buoyed by a significant drop in India’s June retail inflation, which eased to a 77-month low of 2.1 per cent. The Sensex surged 317.45 points or 0.39 per cent to settle at 82,570.91, while the Nifty climbed 113.50 points or 0.45 per cent to close at 25,195.80.
The session began on a flat note with the Nifty opening at 25,089.50, briefly dipping to an intraday low of 25,088 near the opening tick, but steadily climbed throughout the session to register a high of 25,245. “The overall momentum remained positive through the day, supported by strong buying across key sectors,” said Ashika Institutional Equities in their market commentary.
Auto and pharma sectors drive gains
Auto and pharma sectors led the rally, with Hero MotoCorp emerging as the top gainer, surging 4.95 per cent to close at ₹4,462.10. Bajaj Auto followed with a 2.81 per cent gain to ₹8,315.00, while Sun Pharma advanced 2.76 per cent to ₹1,729.00. Shriram Finance and Apollo Hospital rounded out the top five gainers with gains of 2.50 per cent and 1.80 per cent, respectively.
On the losing side, HCL Technologies faced significant pressure, falling 3.26 per cent to ₹1,567.00 following disappointing quarterly results. SBI Life declined 1.50 per cent to ₹1,823.60, while Eternal, HDFC Life, and Tata Steel also closed in the red with losses ranging from 0.71 per cent to 1.37 per cent.
“On Tuesday, the benchmark Nifty index broke its four-day losing streak, closing the session at the 25195.80 level with a gain of 0.45 per cent. The market breadth showed improvement, and the sentiment turned positive across the board,” said Sudeep Shah, Head – Technical and Derivatives Research at SBI Securities.
All sectoral indices in green
All sectoral indices ended in the green, reflecting broad-based buying interest across sectors. The Capital Market index outperformed, rallying 2.10 per cent, while auto, pharma, and realty emerged as the top gainers. “Nifty Auto, FMCG, and Healthcare sectors led the rally with strong gains,” Shah noted.
The broader markets continued their outperformance for the second consecutive session. Both Nifty Midcap 100 and Nifty Smallcap 100 outshone the frontline indices, climbing 0.95 per cent each to 59,612.65 and respective levels. Market breadth remained positive, with 2,475 stocks advancing, 1,422 declining, and 148 remaining unchanged on the BSE.
“What stood out was the continued outperformance of the broader markets. For the second straight session, both Nifty Midcap 100 and Nifty Smallcap 100 outshone the frontline indices,” Shah emphasized. Out of the Nifty 500 universe, 363 stocks closed in the green, underlining the strength in market participation.
Rupee strengthens on equities, weak crude
The rupee also traded positive with gains of 0.17 per cent at 85.82 against the dollar. “Rupee traded positive with gains of 0.17 per cent at 85.82 as dollar index volatility and weak crude prices provided supportive cues. A strong rally in the capital markets further bolstered rupee sentiment,” said Jateen Trivedi, VP Research Analyst at LKP Securities. The rupee is expected to trade in a range of 85.55 to 86.25 in the near term.
Gold trades steady
In the commodities space, gold prices remained in a narrow range of ₹97,750–₹98,050 as Comex gold traded positive near $3,365 with a $20 rise. “Continued tariff escalations by the US on global partners have kept uncertainty high, supporting safe-haven buying in gold,” Trivedi noted. Gold is expected to remain volatile within the ₹97,500–₹98,500 range.
Banking index holds above 57,000
The banking sector showed relative strength with Bank Nifty closing above the key 57,000 mark at 57,006.65, gaining 241.30 points or 0.43 per cent. “The banking benchmark Bank Nifty continued to display relative strength for the second straight session. The index took support near an upward sloping trendline and staged a notable pullback, reflecting renewed buying interest at lower levels,” Shah observed.
Cooling inflation lifts hopes of rate cuts
Investor sentiment received a significant boost from the macroeconomic data. “On the macroeconomic front, investor sentiment received a boost following the release of June inflation data, which showed price levels easing to their lowest point since 2019. This raised expectations of potential interest rate cuts in the near term, further fuelling optimism in the equity markets,” said Ashika Institutional Equities.
“Market sentiment is showing signs of improvement, supported by a blend of global and domestic developments. Optimism is growing around the possibility of an interim trade agreement with the US, which could lead to a moderation in tariff-related risks,” said Vinod Nair, Head of Research at Geojit Investments Limited.
Volatility drops, market breadth positive
The India VIX dropped 4.28 per cent to 11.48, suggesting easing volatility and improved trader sentiment. In the derivatives segment, the highest Call open interest for Nifty is seen at the 25,300 and 25,500 strikes, while the highest Put open interest stands at the 25,000 strike, reinforcing it as a strong support area.
Technical view: Bullish momentum with caution
Looking ahead, technical analysts remain cautiously optimistic. “The Nifty has formed a bullish candle on the daily chart, marked by a minor upper shadow — a sign of buying strength throughout the session,” Shah said. The 20-day EMA zone, located between 25,240 and 25,280, will act as an immediate hurdle. Any sustainable move above 25,280 is likely to extend the pullback rally up to 25,400.
“With the hurdle at the short-term moving average (20 DEMA) near 25,250 still intact, we suggest maintaining a cautious stance on the index and adopting a selective approach on the sectoral front,” advised Ajit Mishra, SVP Research at Religare Broking. However, investor sentiment remains cautious ahead of the release of the U.S. Consumer Price Index data, which could influence global market sentiment and Federal Reserve policy decisions.
Published on July 15, 2025
