Sensex, Nifty End 3-day Winning Streak as Fears of Aggressive Fed Hike Spook D-Street Bulls. Here's Why
News 18The Indian equity markets snapped their three-day rally and lost over 1.5% on February 11 intraday after US consumer prices data came in hotter than expected. In line with soured global sentiment on high US inflation data and rate hike fears, the benchmark indices started trade on a highly negative note a day after RBI’s dovish policy had calmed the markets. Here are the reasons markets dropped sharply today: US Inflation Data US Labor Department data showed consumer prices surged 7.5 per cent last month on a year-over-year basis, topping economists’ estimates of 7.3 per cnet and marking the biggest annual increase in inflation in 40 years. VK Vijayakumar, chief investment strategist at Geojit Financial Services, explained that “US inflation in January came worse-than-expected at 7.5 per cent pushing the 10-year yield to 2.03 per cent discounting a hawkish Fed, which may raise rates by at least by 100 bps this year. “We believe the RBI’s unexpected dovish stance with its focus on growth rather than inflation risk is a slight negative for the INR in the near term for the following reasons, including significant monetary policy divergence with other major central banks, concerns over the RBI’s FX stance, and the risk of the RBI being increasingly seen as lagging behind the inflation curve.”, Nomura Research said in a note.