The markets opened on a cautious note on Wednesday. The benchmark indices were down. Sensex dropped over 200 points at 48,936, while the Nifty 50 index was down 50 points or 0.33 percent at 14,801, tracking losses in index majors HDFC twins, Reliance Industries and ICICI Bank amid negative cues from global markets.
At 09:16 IST, the Sensex was down 221.45 points or 0.45 percent at 48940.36, and the Nifty was down 50.30 points or 0.34 percent at 14800.50.
HDFC was the top loser in the Sensex pack, shedding over 2 percent, followed by M&M, HUL, Nestle India, Tech Mahindra and ICICI Bank. On the other hand, PowerGrid, NTPC, L&T, SBI and ONGC were among the gainers.
In the previous session, Sensex ended 340.60 points or 0.69 percent lower at 49,161.81, and Nifty slumped 91.60 points or 0.61 percent to close at 14,850.75.
Foreign institutional investors (FIIs) were net sellers in the capital market as they offloaded shares worth Rs 336 crore on Tuesday, according to provisional exchange data.
According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, global markets are now caught between two opposing forces - economic recovery and inflation fears. While the former is positive the latter is negative. Going forward, the market trend will depend on which of the two triumphs over the other.
The year-on-year inflation in the US is expected to come around 3.6 percent, pushed high mainly by the base effect and therefore may not sustain. But if the month-on-month inflation data shows a surge, the dovish Fed will be forced to take it seriously.
The fact that the market is a bit apprehensive of rising inflation is reflected in the US 10-year yield rising above 1.6 percent, he said.
"So, this space has to be watched. Meanwhile in India Q4 results continue to be good with better than expected performance from mid-small-caps. Market action is likely to be stock specific based on results," he noted.
Further, market participants will also keep an eye on domestic inflation and industrial production data, scheduled to be released later in the day, traders said.
Key companies announcing their quarterly results today includes Asian paints, Lupin, UPL, Apollo Tyres, Tata Power, Borosil Renewables, Happiest Minds, Sagar Cements, etc.
Asian markets mixed
Asian stock markets retreated Wednesday as investors looked ahead to US data they worry will show inflation is picking up.
The bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading on a negative note in mid-session deals. Hong Kong advanced.
On Wall Street, indices ended in the red in overnight sessions. The benchmark S&P 500 index lost 0.9 percent amid concern inflation might accelerate, hampering an economic recovery and dragging on share prices.
More US inflation were due out Wednesday. Investor concern is increasing following a price rise for industrial materials including copper and crude oil.
“Asian equities traded sideways following a lackluster session on Wall Street, where risk sentiment prevailed amid inflationary concerns,” Anderson Alves of ActivTrades said in a report. This week's data are "essential for investors worldwide as US markets are the primary benchmark for risk assets globally.”
The Shanghai Composite Index lost less than 0.1 percent to 3,439.57 while the Nikkei 225 in Tokyo fell 0.6 percent to 28,439.52. The Hang Seng in Hong Kong advanced 0.5 percent to 28,016.71.
The Kospi in Seoul tumbled 1.6 percent to 3,158.78 and the S&P-ASX 200 in Sydney sank 0.6 percent to 7,056.30. New Zealand and Southeast Asian markets also declined.
On Wall Street, banks and energy companies led a broad pullback Tuesday.
The S&P 500 fell to 4,152.19. The Dow Jones Industrial Average sank 1.4 per cent in its worst day since February. The Nasdaq composite lost 0.1 per cent to 13,389.43.
Commodity prices have been rising, particularly for industrial metals such as copper and platinum, as well as for energy commodities like gasoline and crude oil.
Big technology companies were among the biggest decliners for a second day. Tech stocks get most of their valuation from future profits that might be less valuable if they are eroded by inflation
Fuel prices up
The price of petrol and diesel were hiked 25 paise each. This is the third consecutive day that prices have been hiked.
Bharat Petroleum Corporation Ltd (BPCL), Indian Oil Corporation Ltd (IOCL) and Hindustan Petroleum Corporation Ltd (HPCL) revise the fuel prices on a daily basis in line with benchmark international price and foreign exchange rates.
Meanwhile, international oil benchmark Brent crude was trading 0.36 percent lower at $68.30 per barrel.