Why Nifty and Sensex are trading in red today
Indian stocks faced a substantial drop today, influenced by the downturn in US markets last night. In early trading, Sensex fell 614.75 points to 70,940.44 while Nifty dropped 170.45 points to 21,572.80. Major US indices fell over 1.5% with the S&P 500 and Nasdaq 100 decreasing by 1.4% and 1.6%, respectively. This decline is attributed to higher-than-anticipated inflation data in the US, which has essentially eliminated the possibility of a rate cut from the US Federal Reserve in March.
US inflation data impacts global markets
Recent US CPI data showed that prices increased by 3.1% annually and 0.3% monthly, surpassing expected values of 2.9% and 0.2%, respectively. Jason Pride at Glenmede Investment Management commented that hopes for the US Federal Reserve announcing a rate cut have now subsided. Market analysts around the world expect the US Federal Reserve to lower rates, which would boost the economy by enabling easier borrowing and spending.
Impact of disappointing Q3 results worsened by US inflation data
In response to the unfavorable inflation data, US 10-Year treasuries rose 14 basis points to 4.31% and the dollar index increased by 0.6%. Asian markets also suffered, with Japan's Nikkei 225 index dropping 0.44% and South Korea's Kospi plummeting 1.7%. Amit Goel, co-founder and Chief Global Strategist at Pace 360, said that the negative news from global markets creates a 'double whammy' for Indian stocks, as local markets were already weakened by disappointing Q3 results.