Sensex, Nifty Set To Rally As Slowing US Inflation Eases Fed Worries

(RTTNews) - Indian shares look set to follow global peers higher on Thursday after new data showed inflation steadying in the world's largest economy.

Strong earnings results from the likes of Eicher Motors, Coal India and IRCTC may also help underpin investor sentiment.

Benchmark indexes Sensex and the Nifty moved in a narrow range before finishing on a flat note Wednesday. The rupee rose by 38 paise to close at 79.25 against the dollar. Asian markets followed Wall Street higher while oil dipped slightly to hover near $92 a barrel, after having risen sharply overnight on data showing a bigger-than-expected drop in gasoline inventories in the U.S.

Gold dipped as the dollar and Treasury yields rebounded on hawkish comments from Minneapolis Fed Bank President Neel Kashkari and Chicago Fed President Charles Evans.

U.S. stocks rose sharply to reach three-month highs overnight after data showed inflation grew at a slower pace than expected in July, helping ease recession fears and worries about aggressive monetary tightening.

The consumer price index unexpectedly came in flat in July compared with June and rose 8.5 percent year-on-year, reflecting a bigger than expected slowdown from the 9.1 percent spike in June.

The Dow rallied 1.6 percent, the tech-heavy Nasdaq Composite surged 2.9 percent and the S&P 500 jumped 2.1 percent.

European stocks closed higher on Wednesday and bond yields fell amid hopes that U.S. inflation may have finally peaked.

The pan European Stoxx 600 gained 0.9 percent. The German DAX climbed 1.2 percent, France's CAC 40 index rose half a percent and the U.K.'s FTSE 100 edged up 0.3 percent.