Indian shares fall after 4 days of gains as US inflation worsens

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New Delhi: Due to persistent inflation in the US, Indian stocks opened sharply lower on Wednesday after recording gains for four consecutive days.

Although it eased slightly from 8.5 to 8.3 percent in July, US consumer inflation is still above the target level of 2 percent.

Anticipation of the increase in interest rates

The US Federal Open Market Committee raised the key policy interest rate by 75 basis points to 2.25-2.50 percent at its most recent meeting in response to the country’s highest inflation in more than four decades, and predicted that another rate hike will be warranted.

The US Federal Reserve also raised interest rates at its June meeting by 75 basis points, which was at the time the highest increase since 1994.

Another interest rate hike is imminent

Several officials at the US central bank’s Federal Reserve recently said another interest rate hike is imminent during the two-day monetary policy meeting starting on September 20.

US markets ended sharply lower on Tuesday after the latest inflation data from the world’s largest economy showed a less-than-expected moderation in the price rise index, which is at a multi-decade high, said Mohit Nigam, head of PMS, Hem. Values.

SENSEX, NIFTY down

In terms of domestic indices, at 9.24 am the Sensex was trading at 59,977.47 points, down 593.61 points or 0.98 per cent, while the Nifty was trading at 17,904.35 points, down 165 .70 points or 0.92 percent.

Among the Nifty 50 companies, 38 declined and the rest 12 advanced this morning, according to data from the National Stock Exchange.

“Inflation is consolidating”

“Worse-than-expected U.S. CPI inflation data, despite cooling gas prices, came as a surprise. Now the market fears inflation is consolidating and an ultra-hawkish Fed could cause a hard landing for the US economy,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

For fresh clues, investors will await India’s wholesale inflation data for August due later today. India’s wholesale inflation eased substantially in July to 13.93 percent from 15.18 in June, but remains in double digits.

Inflation based on the Wholesale Price Index (WPI) has been in double digits for 16 consecutive months.



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