The domestic benchmark started trading in the green on Tuesday after yesterday's sluggish performance. The BSE Sensex opened at 62,300 points and currently trading close to the 62,500 mark; meanwhile, Nifty-50 opened at 18,524 and currently trading close to the 18,600 mark.
Contrary to the projections of 6.4% by various polls, India's retail inflation, measured by Consumer Price Index (CPI), dropped to 5.88%, slightly below the threshold of RBI's upper tolerance band of 6%. Since October, the inflation has been cooling off; in November, it dropped to this year's lowest level.
The better-than-expected inflation report is sentimentally positive for the market as it may pause further rate by RBI in the upcoming monetary policy meeting in February.
![sensex](https://data1.ibtimes.co.in/en/full/757859/sensex.jpg?w=348&h=269&l=50&t=40)
The data on India's factory output measured by the Index of Industrial Production (IIP) was also released yesterday by the Ministry of Statistics & Programme Implementation (MoSPI), showing a 4% contraction for October driven primarily by a contraction in manufacturing activity.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, "The two macroeconomic data which came yesterday have significant implications for the market. The CPI inflation for November at 5.88 % is below the RBI's upper tolerance limit. This is good news. But the bad news is that the Index of Industrial Production (IIP) shows a contraction of 4% in October. Taken together these two macro data suggest that the MPC is likely to refrain from further rate hikes.
![A broker monitors share prices at a brokerage firm in Mumbai August 9, 2011. stock market](https://data1.ibtimes.co.in/en/full/665626/stock-market.jpg?h=450&l=50&t=40)
Investors will closely follow the Fed's decision on the rate hike set to release tomorrow (14th December) and US inflation data before any risky bets. The financial market wildly speculates a 50-bps rate hike.