The Indian market extended gains to the sixth straight session as benchmarks Nifty50 and Sensex ended higher by more than half per cent on Tuesday. The barometer indices surged amid easing of the wholesale price-based inflation (WPI) to 13.93 per cent in July on easing prices of food articles and manufactured products. The Wholesale Price Index-based inflation was 15.18 per cent last month and at a record high of 15.88 per cent in May. It was 11.57 per cent in July last year. 

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The easing of inflationary pressures has encouraged domestic investors to remain optimistic about the pace of economic recovery, said Vinod Nair, Head of Research at Geojit Financial Services. "Better-than-expected CPI numbers, aided by slower increase in food and fuel prices, may limit the pace of rate hikes by the RBI. In the Asian market, the Chinese central bank surprised the market by cutting its interest rates after a weak set of economic data. Following that, oil prices slumped on demand worries," he added. 

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said the important takeaway from the CPI July print is that the trend of declining inflation is sustaining. CPI inflation has declined from 7.79% in April to 7.04% in May to 7.01% in June to 6.71% in July, he said.

The stubborn core inflation also has declined from 6% in June to 5.8% in July, said the expert.

"Inflation is likely to decline again since the good monsoon (104 % of the normal) augurs well for food production and will have a benign effect on food prices. However, the RBI will have to remain hawkish for some more time since inflation will remain elevated till December this year. IIP at 12.3% for June indicates that the growth momentum in the economy continues," Vijayakumar added.

Meanwhile, amid positive global cues and softening oil prices, the Nifty50 rose over 0.70% to end above 17,800, while the Sensex surged by around 400 points.  

"Nifty has given a falling trend line breakout on the daily chart suggesting a rise in optimism. The momentum oscillator RSI is in the overbought zone; however, no bearish crossover is visible in the indicator. The trend is likely to remain positive as long as it remains above the falling trendline," said Rupak De, Senior Technical Analyst at LKP Securities. 

The profit booking in the market may come once Nifty falls below the trend line, he said. "Support on the lower end is visible at 17700. On the higher end, resistance is seen at 18000," he added.

In the broader market, outperforming the benchmarks, Nifty Midcap rose almost 1.5% and Small cap gained around one per cent in the closing trade.  

Sectorally, Nifty Realty, FMCG and Financial Services gained the most, while PSU Bank and Media were the only losers on Tuesday.  

HDFC Ltd, Adani Ports, Eicher Motors, BPCL, Maruti, Mahindra & Mahindra, Asian Paints, Hindustan Unilever and Ultratech Cements were among top gainers. 

Grasim, Hindalco, JSW Steel, Bharti Airtel, State Bank of India, TCS and Bajaj Finance were among few stocks that declined in an otherwise positive market