Markets still choppy; inflation woes linger on RBI’s minutes

Domestic equities turned choppy on Thursday  after Wednesday’s rebound and settled with a marginal 25 points loss as weakening rupee and nagging inflation concerns reflected by the RBI’s policy meet minutes dampened sentiment.

Besides, a weak trend in other Asian markets and the US Federal Reserve minutes indicating a possible rate hike also influenced trading movement on domestic bourses.

Meanwhile, in the February derivatives expiry, the Sensex tumbled by 2,230.94 points, or 6.18 per cent; and Nifty declined by 686.95 points, or 6.20 per cent. The minutes from the Reserve Bank’s February 6-7 meeting showedthe monetary policy committee members were concerned about inflation as well as uncertainty about the strength of economic recovery.

Squaring-up of positions by participants on the last trading session of February series contracts in the derivatives segment on Thursday also had an impact on trading. Investors remained cautious as the rupee depreciated by 34 paise to hit a fresh 3-month low of 65.10 (intra-day) against the dollar on Thursday at the forex market.

“The US Fed’s hawkish stance on future rate hike on account of improving economic activity and expiry led volatility in domestic market impacted the sentiment. Rise in India’s 10-year bond yield due to inflationary pressure and rupee depreciation is signalling cautious trade in near term,” Vinod Nair, Head of Research, Geojit Financial Services Ltd, said.