India's Sensex hits record closing high as Fed rate-hike fears ease

FILE PHOTO: Bombay Stock Exchange (BSE) in Mumbai

By Sethuraman N R

BENGALURU (Reuters) - Indian shares rose on Friday, with the blue-chip S&P BSE Sensex hitting a record closing high on a rally in IT companies and banks, as cooling U.S. inflation raised hopes for a less hawkish Federal Reserve.

The NSE Nifty 50 index closed up 1.78% at a more-than-one-year high of 18,349.70, while the S&P BSE Sensex added 1.95% to a record close of 61,795.04.

Both the indexes logged their fourth straight weekly gain, rising over 1% this week.

U.S. Labor Department's data on Thursday showed the annual increase in consumer price index was below 8% for the first time in eight months. The Nasdaq surged 7.4% on Thursday.

India will report its October inflation number next week.

"We are seeing a relief rally in the IT stocks following Nasdaq's overnight jump," said Saurabh Jain, assistant vice-president, research, at SMC Global Securities.

"Inflation is cooling off but it is still above the tolerance level. Fed's policy actions will be more data dependent going forward," Jain added.

The Nifty IT index surged 3.8%. The bank Nifty index gained as much as 1.8% to hit another record high on strong earnings from lenders amid higher credit growth and improved asset quality.

Private lender HDFC Bank and its major shareholder Housing Development Finance Corp rose more than 7% to mark their biggest intraday gains in more than seven months.

Eicher Motors was the top loser on the Nifty 50 index, falling 4.90% after the Royal Enfield owner's quarterly profit missed estimates.

Shares of Zomato jumped 13.8% after the Indian food delivery firm reported a narrower loss for the second quarter on Thursday.

(Reporting by Nallur Sethuraman in Bengaluru; Editing by Dhanya Ann Thoppil and Janane Venkatraman)