Sensex, Nifty Poised For Flat Open As Retail Inflation Spikes

Indian shares are poised to open on a flat note Wednesday after data showed India’s retail inflation soared to a 17-month high of 6.95 percent in March, much above the RBI’s upper tolerance band.

This is for the third straight month that inflation has stayed above the RBI’s 2-6 percent tolerance band.

If oil price remains above $110 per barrel for a quarter, the government will have to pass it on to consumers, Chief Economic Advisor V Anantha Nageswaran said on Tuesday.

Oil extended gains in Asian trade after having jumped around 7 percent on Tuesday as Russian President Vladimir Putin vowed to continue the war in Ukraine and China partially eased Covid curbs.

Benchmark indexes Sensex and the Nifty fell about 0.7 percent and 0.8 percent, respectively on Tuesday to extend losses for a second day running, while the rupee ended down 23 paise at 76.14 against the dollar.

Asian stock markets were mixed this morning and U.S. Treasury yields edged lower, while the U.S. dollar index hovered near May 2020 highs, limiting the upside in precious metals.

U.S. stocks reversed earlier gains on Tuesday to end lower for a second straight session as fresh data showed inflation accelerated to a new 40-year high in March, though some components of core inflation weakened.

All three major averages slipped around 0.3 percent while two- and 10-year Treasury yields had their biggest declines in weeks amid speculation that the inflation surge that started in early 2021 is close to a peak.

U.S. consumer inflation rose 8.5 percent in March from a year ago, marking the fastest growth since December 1981.

European stocks fell on Tuesday after data showed confidence in Germany’s economic recovery slid for a second month. The pan European Stoxx 600 slipped 0.4 percent.

The German DAX dropped half a percent, France’s CAC 40 index eased 0.3 percent and the U.K.’s FTSE 100 shed 0.6 percent.