Markets further slip on inflation concerns

Mumbai: Key stock market indices Sensex and Nifty closed lower on Wednesday due to losses in banking, metal and select FMCG stocks amid mixed global cues.

The 30-share BSE Sensex ended 80.63 points or 0.13 per cent lower at 60,352.82 as 17 of its constituents closed in red. The index opened on a weak note and touched the day's low of 59,967.45 before recovering some of the losses in afternoon session.

The broader NSE Nifty declined by 27.05 points or 0.15 per cent to end at 18,017.20 with metal majors Hindalco, Tata Steel and JSW Steel taking a beating. As many as 27 of Nifty stocks declined while 22 advanced. Analysts said global inflation worries weighed on the market sentiment.

"Broadly, domestic market continued to trade negative after disappointing opening as inflation worries affected the global markets. However, the market trend was mixed on stock-to-stock basis. China's CPI rose 1.5 per cent YoY, while the producer price index rose by 13.5 per cent YoY owing to imported inflation and domestic supply shortages. Global investors are awaiting the release of the US inflation data due later today, which is expected to continue at peak levels," said Vinod Nair, head (research) at Geojit Financial Services.

S Hariharan, head (sales trading), Emkay Global Financial Services, stated: "Market sentiment has been somewhat weaker with respect to institutional flows over the last week – FIIs have been net sellers worth Rs 4,000 crore in cash segment and Rs 2,500 crore in stock futures in November so far. Retail long leverage through stock futures continues to be very strong – net long open interest is up to $14 billion, which is a life high. Exuberant participation in primary issuances and high leverage, combined with peaking of earnings upgrade cycle, poses a major risk in the near-term for broader markets."

Arijit Malakar, head (research-retail) at Ashika Stock Broking Ltd, said: "Global factors like an increase in China's factory-gate price due to imported inflation weigh on market sentiments.

Investors will scrutinize the US CPI report due out later in the day for additional cues about the outlook for interest rates heading into next year."

"A sharp surge in the select banking majors, thanks to encouraging earnings by the ICICI Bank, not only capped the downside, but also helped the index pare losses. On the index front, Nifty should hold 17,950 levels for any rebound else profit taking would resume," adds Ajit Mishra, V-P (research), Religare Broking.