Sensex, Nifty end higher for second straight session led IT, pharma shares

Indian shares recovered from a lacklustre start to end higher on Tuesday, with IT and pharma stocks leing charge ahe of crucial US inflation data that could pave way for interest rate cuts.

Nifty 50 index closed up 0.42 per cent at 25,041.1, while S&P BSE Sensex gained 0.44 per cent to 81,921.29.

Both benchmark indexes rose about 0.25 per cent in early tre before surrendering gains, weighed down by heavyweight financials.

However, a 1.7 per cent rise in IT companies, ahe of Wednesday's US inflation report, helped lift domestic equities.

Indian IT firms gain a significant chunk of revenue from United States.

"A softer-than-expected US inflation data could boost chances of a 50 basis point Federal Reserve rate cut and spur a global stocks rally," said Sunny Agrawal, he of fundamental equity research at SBICaps Secuties, ding that markets have priced in a 25 basis point cut as most probable scenario.

Pharma stocks gained 1.1 per cent after goods and services tax (GST) council recommended cutting tax on select cancer drugs.

Investors are seeking safety and parking money in defensive segments like consumer and pharma ahe of likely Fed rate cut, Agrawal said.

In contrast, financials dropped 0.3 per cent, weighed down by insurers HDFC Life and SBI Life after posting modest growth in premiums for August.

Among individual stocks, pharma company Divi's Laboratories jumped about 5 per cent to a near three-year high on block deals.

Budget airline SpiceJet rose 3 per cent after Carlyle Aviation agreed to convert $30 million worth of lease arrears to equity.

more domestically focussed small- and mid-caps rose about 1.2 per cent each.

Liquidity surplus in markets is supporting strategy of buying dips, but a clear directionality for domestic equities will only emerge after US inflation data and Fed rate decision next week, analysts said.