Indian Inflation Below Expectations at 1.33% Spurs Limited Sensex Rebound After Five-Day Losing Streak

Mumbai | EcoPulse24

The BSE Sensex closed Monday up 0.4% at 83,878 points, ending a five-day losing streak. The limited rebound was driven by lower-than-expected inflation data and optimism over progress in US-India trade discussions. The Sensex pared early losses after comments from new US Ambassador Sergio Gor confirmed advances in trade agreements, with another negotiation round set for Tuesday.

India's consumer inflation rose to 1.33% in December 2025, up from 0.71% in November but below market expectations of 1.5%. This remains well under the Reserve Bank of India's 2-6% target range. Food prices, which account for about half the consumer basket, fell by -2.71% (vs. -3.91% in November), while inflation in housing eased to 2.86% (from 2.95%) and in fuel and lighting to 1.97% (from 2.32%). On a monthly basis, the consumer price index increased by 0.05% in December.

Tata Steel led market gains with a 2.7% rise, followed by Asian Paints (+2.6%), Trent (+1.9%), SBI (+1.5%), and Hindustan Unilever (+1.3%). Bajaj Finance (-1.1%) and Infosys (-1.0%) declined. Despite the rebound, ongoing foreign outflows and rising geopolitical tensions limited market performance, with attention now turning to upcoming results from TCS and HCL Technologies.

Analysis:
The 1.33% inflation reading provides the Reserve Bank of India with clear monetary flexibility, easing market pressures and enabling a technical Sensex rebound to 83,878 points. However, sustained recovery will require a reversal in foreign flows and confirmation via corporate earnings. The near-term outlook remains consolidative with selective positive momentum rather than a full directional shift.