FX.co ★ Sensex, Nifty Set To Extend Losses

Indian equities are expected to edge lower on Wednesday, driven by weak international trends and growing domestic inflationary pressures.

Globally, market sentiment remains tenuous amid uncertainties surrounding U.S. President Trump's policy direction and expectations regarding the Federal Reserve's stance.

In India, consumer price inflation surged in October, reaching its highest in over a year due to escalating food prices, according to the latest data from the National Statistical Office. The annual increase in consumer prices hit 6.21% in October, up from 5.49% in September, surpassing the anticipated rate of 5.81%. This marks the steepest rise in inflation since August 2023, when prices climbed 6.83%.

Additionally, separate statistics indicated a robust expansion in India's industrial output for September, following a minor decline in the previous month. Industrial production grew by 3.1% year-on-year, rebounding from a 0.1% decrease in August, attributed to the impact of heavy rains. This performance exceeded the expected growth rate of 2.5%.

On Tuesday, the benchmark indices, Sensex and Nifty, both declined by over 1% due to worries over foreign institutional investor (FII) outflows and dissatisfaction with the domestic earnings season's performance.

Asian markets opened lower today, while the dollar continued its post-election ascent, with anticipation building over the upcoming release of U.S. consumer inflation data. U.S. Treasury 10-year yields remained mostly stable after a 12 basis point surge on Tuesday, while gold held steady above $2,600 per ounce, recovering after hitting a near two-month low due to the dollar's strength. Oil prices stabilized near this month's lows following OPEC's downward revision of its global oil demand growth forecast for 2024.

In the U.S., stock markets exhibited volatility before closing slightly down overnight as investors took profits from recent gains in anticipation of key economic data later this week. The S&P 500 fell by 0.3%, breaking a five-day winning streak and marking its worst performance since October 31, amid concerns that Trump's proposed tariff policies might trigger inflation and sustain elevated U.S. interest rates. The Dow Jones dipped by 0.9%, while the tech-focused Nasdaq Composite decreased by 0.1%.

European markets experienced a sharp drop on Tuesday, weighed down by European Central Bank (ECB) officials' warnings that Trump's protectionist measures could exacerbate inflation and hinder global economic growth. The pan-European STOXX 600 index plunged by 2%, with Germany's DAX declining by 2.1%, France's CAC 40 falling 2.7%, and the UK's FTSE 100 losing 1.2%.