Can markets extend gains amid rising crude and rate hike fears?
The Indian stock indices experienced a retreat as increasing crude oil costs negatively impacted market sentiment. Retail inflation hit 6.09% in October, breaching the tolerance threshold set by the Reserve Bank of India. This spike raised alarms about possible future rate adjustments. Sectors like realty, auto, and cement faced considerable selling activity due to these economic dynamics.…
Mumbai markets saw a respite from their three-day winning streak on Friday as inflation and crude oil price concerns dampened investor confidence. The BSE Sensex slipped 318.56 points, or 0.39%, to 81,592.45, while the NSE Nifty50 tumbled 155.05 points, or 0.61%, to 25,144.30. Despite the decline, both indices closed the week on a higher note, with the Sensex up 0.7% and the Nifty gaining 0.45%.
Rising Brent crude futures prices to about $95.5 a barrel from $92 as tensions escalated over attacks on Saudi energy infrastructure and disruptions in the Strait of Hormuz. India's retail inflation surged to 6.09% in October, surpassing the RBI's 6% upper threshold for the first time in two years, fueling investor worries. Food inflation also accelerated to 8.94%, raising concerns about the interest-rate outlook and household spending.
Gaurav Garg, head of research at Lemonn, noted that the market's risk environment had grown more complicated as the week ended. The RBI's upper tolerance band had been breached by both inflation metrics, raising concerns about the impact on India's current account, the rupee, corporate costs, and inflation. Garg maintained a cautiously optimistic outlook for the near term, expecting markets to consolidate with periodic volatility rather than continue a straight-line upward trend.
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