By Vivek Kumar M and Bharath Rajeswaran
(Reuters) -Indian shares inched higher in early trade on Tuesday as lower-than-expected domestic inflation lifted investor sentiment, although gains were capped by IT firm HCLTech’s lower margin forecast.
The Nifty 50 was up 0.24% at 25,143.25 points and the BSE Sensex rose 0.22% to 82,437.29 points, as of 10:36 a.m. IST.
The broader mid- and small-caps added 0.4% and 0.6%, respectively.
India’s annual retail inflation slowed to a more than six-year low of 2.10% in June, near the lower range of the central bank’s tolerance band, as food prices continued to ease, making a case for further interest rate cuts.
“The (June) inflation figure has been good and that is giving some comfort to investors today after a weak start to the earnings season from IT sector,” said Anita Gandhi, founder and head of institutional business at Arihant Capital Markets.
The lower inflation reading and likely further softening in July will pave the way for potential additional easing by the Reserve Bank of India, Barclays said in a note.
The gains in the benchmarks were limited by a more than 3.5% decline in HCLTech. The stock was the top loser among Nifty 50 and IT companies after it reported lower-than-expected quarterly profit and lowered its annual margin forecast.
This weighed on the Nifty IT index, which was down 0.2% and set for a fifth straight session of losses.
Among other stocks, Tejas Networks tumbled nearly 7% after the telecom infrastructure services provider posted a loss for the first quarter.
Agricultural chemicals producer Rallis India jumped 7% after reporting a higher June-quarter profit. Tata Technologies gained 2.2% after the engineering and R&D firm posted a smaller-than-expected revenue drop.
(Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Sumana Nandy and Mrigank Dhaniwala)
