Rate cut, inflation worries unnerve stock markets

Mumbai: Benchmark equity indices- Sensex and Nifty- declined for a second straight session on Monday, losing more than half a per cent due to selling in energy, banking and financial stocks amid lingering concerns over interest rates and inflation. Reversing its early gains, the BSE Sensex closed lower by 311.03 points or 0.51 per cent at 60,691.54 as 18 of its scrips declined. The index opened higher at 61,112.84 and gained further 290 points to hit the day's high of 61,290.19.

However, selling in index major Reliance Industries, HDFC twins, ICICI Bank Maruti and Kotak Bank dragged down the barometer to a low of 60,607.02. The NSE Nifty fell 99.60 points or 0.56 per cent to end at 17,844.60 as 30 of its constituents declined while 20 advanced. Nifty touched a high of 18,004.35in early trade but later fell to a low of 17,818.40. Sensex lost nearly 317 points while Nifty declined by 91 points on Friday.

"Stocks are getting beaten ahead of the release of Fed minutes on Wednesday. Maintaining its guard against inflation, the Fed is expected to remain hawkish. As expected, it is unlikely to have a dire effect on the global stock market. However, the consequence of constant high interest rates is causing a slowdown in demand and the earnings outlook.Hence, the near-term trend will be cautious," said Vinod Nair, head (research) at Geojit Financial Services.

"The continuous pressure in the banking and financial pack combined with a downtick in energy majors kept the tone negative. Drubbing in banking stocks dragged down the markets today, which languished in the negative territory for a major part of the trading session. Factors such as more pain going ahead through further rate hikes, rising inflation, and the recent Adani saga continue to weigh on investors' minds," said Ajit Mishra, V-P (technical research), Religare Broking Ltd.