Sensex, Nifty Set To Tumble As Growth Worries Mount

Indian shares look set to open sharply lower on Thursday as fears of a sharp economic downturn spurred a flight to havens including the dollar and sovereign bonds.

It is feared that high inflation and the Fed’s tightening monetary policy may weigh on corporate profit margins and consumer spending.

Benchmark indexes Sensex and the Nifty reversed course to end slightly lower on Wednesday following two successive days of gains.

The rupee finished marginally lower at 77.58 per dollar, slipping for a third straight session.

Asian markets followed Wall Street lower, gold traded flat and the dollar held its strong overnight gains, while oil prices rose about 1 percent after falling around 2.5 percent in the overnight U.S. trading session on demand concerns.

U.S. stocks suffered their sharpest fall in almost two years on Wednesday, as weak housing data and a series of disappointing quarterly results from some major retailers added to fears of a recession.

The Dow tumbled 3.6 percent and the S&P 500 lost 4 percent to close at their lowest levels in over a year, while the tech-heavy Nasdaq Composite plummeted as much as 4.7 percent.

European stocks also closed lower on Wednesday as Britain’s inflation rate hit a 40-year high and ECB policymaker Klaas Knot said that a 50-basis-point rate hike in July was possible.

The pan European Stoxx 600 fell 1.1 percent. The German DAX declined 1.3 percent, France’s CAC 40 index shed 1.2 percent and the U.K.’s FTSE 100 gave up 1.1 percent.