Equities Sensex and Nifty opened muted on Tuesday as investors tracked escalating Middle East tensions and elevated crude oil prices, while a faster-than-expected rise in retail inflation added to concerns over further interest rate hikes.
GIFT Nifty futures stood at 22,423.5 at 7:50 am, signalling a muted start for the Nifty 50, which closed at 22,363.35 on Monday, according to figures cited in a Reuters report.
India's retail inflation accelerated to a higher-than-expected 5.54 per cent in September, data showed on Monday, moving closer to the central bank's upper tolerance limit of six per cent. The rise strengthened the case for further rate hikes as the Iran war and a weak monsoon added to price pressures.
"If food and energy prices remain elevated, persistent price pressures could strengthen the case for further monetary tightening and keep borrowing costs higher for longer," said Hariselvan Radhakrishnan, founder and CEO of HST Wealth.
The Iran war, now in its eighth month, continued to keep Brent crude futures elevated at around $105 per barrel. Traders assessed supply risks from attacks on Saudi Arabia while weighing a proposed increase in diesel supplies from Russia.
Asian stocks fell more than two per cent in early trading on Tuesday, with South Korea's tech-heavy KOSPI sliding six per cent and Japan's Nikkei dropping 2.6 per cent.
{{/usCountry}}Asian stocks fell more than two per cent in early trading on Tuesday, with South Korea's tech-heavy KOSPI sliding six per cent and Japan's Nikkei dropping 2.6 per cent.
{{/usCountry}}The Reserve Bank of India tightened rules governing rupee non-deliverable derivative contracts, extending the 20 per cent cash reserve requirement to banks' own rupee currency hedges.
The move is the latest in a series of measures announced by the central bank since Saturday to support the rupee, which has weakened amid elevated oil prices and capital outflows.
Foreign investors net sold Indian shares worth 17.08 billion rupees ($178.34 million) on Monday, according to provisional data, marking their 12th consecutive session of selling.
They have already offloaded $4.9 billion worth of shares in October, putting the month on track for the biggest monthly selloff since June.