India’s benchmark stock index rose early on Tuesday, reversing modest losses in the previous session, after domestic retail inflation in November fell below the central bank’s tolerance level, fuelling expectations for a slower pace of interest rate hikes.

The BSE Sensex rose 84.94 points to 62,215.51 in early trade, and the broader NSE Nifty opened slightly higher, mirroring the green in other Asian indexes.

On Monday, data showed that domestic retail inflation fell to an 11-month low of 5.88% in November, below the upper end of the Reserve Bank of India’s 2-6% target range for the first time since December 2021.

That supports the view that the RBI will slow the pace of future rate hikes ahead of crucial US inflation data later in the day and the Federal Reserve’s final meeting of the year on Wednesday.

However, a surge in crude prices, underpinned by US supply concerns and hopes for a boost in Chinese demand, could limit gains in domestic stocks. High oil prices harm a country like India, which imports most of its crude oil.

Foreign institutional investors (FII) sold off for a sixth straight session on Monday, the longest in seven weeks, and could weigh on Indian stocks if today’s trend continues.

Still, overnight confidence on Wall Street that the Federal Reserve and other central banks will slow down the pace of future rate hikes supported Asian stocks on Tuesday.

This week, the US Federal Reserve, European Central Bank and Bank of England are expected to raise interest rates by 50 basis points instead of the previous aggressive 75 basis points.