Indian stocks face subdued start as inflation fuels rate fears

what happened

Indian equities were set for a subdued Tuesday opening, Newsmetry API reported, as traders followed Middle East tensions and elevated oil prices. A faster rise in retail inflation added to expectations that interest rates could be raised again. At 7:50 a.m. IST, GIFT Nifty futures (GIFc1) stood at 22,423.5, pointing to a muted start for the Nifty 50 after its Monday close at 22,363.35.

India’s retail inflation reached 5.54% in September, above forecasts and close to the central bank’s 6% upper tolerance limit. The eight-month Iran war and a weak monsoon are adding to price pressures. Hariselvan Radhakrishnan, founder and CEO of HST Wealth, said sustained strength in food and energy costs could make additional monetary tightening more likely and keep borrowing expenses elevated for longer.

Brent futures remained near $105 a barrel as traders considered supply threats linked to attacks on Saudi Arabia alongside a proposal for extra diesel shipments from Russia. Asian equities dropped more than 2% in early Tuesday trading; South Korea’s KOSPI fell 6% and Japan’s Nikkei declined 2.6%. The Reserve Bank of India tightened rules for rupee non-deliverable derivatives and extended a 20% cash-reserve requirement to banks’ own rupee currency hedges. Overseas funds disposed of Indian shares worth 17.08 billion rupees ($178.34 million) on Monday, marking a 12th straight selling session. Their October sales have reached $4.9 billion, the largest monthly outflow since June. HCLTech reported a 21.2% increase in second-quarter net profit, ICICI Prudential Asset Management Company posted revenue growth of more than 16% and a 6.1% profit rise, while RBL Bank’s quarterly profit nearly tripled.

why it matters

Higher inflation, expensive oil and continued foreign selling are weighing on Indian assets while strengthening the market’s focus on possible further action by the Reserve Bank of India.

instruments