BENGALURU: Indian shares across the board hit all-time highs on Thursday, tracking a global rally after softer-than-expected U.S. inflation data boosted expectations that the Federal Reserve would lower interest rates sooner rather than later.

The NSE Nifty 50 hit a record high for a third time in four sessions, while fellow benchmark S&P BSE Sensex also notched a record high, as did the more domestically focussed small- and mid-cap indexes.

U.S. consumer prices were unexpectedly unchanged in May, while core prices grew at their slowest annual pace in over three years, lifting bets of a rate cut in September to 56.7% from 46.8% previously, per the CMEGroup's FedWatch tool.

That sparked a rally in U.S. and Asia stocks despite Fed Chair Jerome Powell saying inflation was still too high and the central bank's "dot plot" signalling just one rate cut this year, compared with three cuts projected in March.

"Markets are rejoicing cooler-than-expected U.S. inflation data along with clarity on the dot plot this year," said Dhawal Ghanshyam Dhanani, fund manager at SAMCO Mutual Fund.

"To the surprise of many, Fed indicated just one 25 basis points rate cut in 2024 and possibly four rate cuts in 2025."

The Nifty 50 was up 0.25% at 23,381.35 as of as of 10:48 a.m. IST, while the Sensex rose 0.26% to 76,801.78.

IT firms, which rely heavily on U.S. clients for revenue, jumped 1.2%.

Financials, more sensitive to domestic interest rates, climbed 0.4% after data showed India's retail inflation eased slightly in May.

Among individual stocks, Paytm gained 6% after saying its ticket-booking services for travel and entertainment would be available on Samsung Wallet in India.

Sobha approved a rights issue, sending its stock jumping 6% and driving realty stocks about 2% higher. (Reporting by Kashish Tandon and Bharath Rajeswaran in Bengaluru; Editing by Savio D'Souza and Sonia Cheema)