Sensex, Nifty Set For Gap-down Opening Amid Fed Worries

(RTTNews) - Indian shares look set to open sharply lower on Wednesday, as another hot U.S. inflation reading killed any chance of a downward shift in Fed tightening.

Traders are now pricing in a 20 percent chance of 100 bps rate hike when the FOMC meets next week.

Benchmark indexes Sensex and the Nifty jumped around 0.8 percent each on Tuesday to extend gains for a fourth straight session, while the rupee rose by 36 paise to close at 79.17 against the greenback.

India's chief economic adviser, V Anantha Nageswaran, on Tuesday said that the country is not defending the rupee and that its economic fundamentals are such that the currency can take care of itself.

Asian markets followed Wall Street lower, and gold traded weak around $1,700 per ounce, while the dollar index is seeing its biggest single-day percentage gain since March 2020.

Oil crept higher after OPEC maintained its forecast for strong growth in global oil demand in 2022 and 2023.

U.S. stocks tumbled overnight to snap a four-session winning streak, as hotter-than-expected inflation numbers for August dented investor optimism over price decline and the pace of rate hikes.

The Dow lost 3.9 percent, the tech-heavy Nasdaq Composite plunged 5.2 percent and the S&P 500 plummeted 4.3 percent to log their worst day since June 2020 as data showed monthly CPI increased at an annual pace of 8.3 percent, more than economists' median estimate of 8.1 percent.

European stocks lost ground Tuesday on worries about high inflation and aggressive policy tightening by the Federal Reserve at its upcoming policy meeting next week.

The pan European Stoxx 600 dropped 1.6 percent. The German DAX fell 1.6 percent, France's CAC 40 index gave up 1.4 percent and the U.K.'s FTSE 100 declined 1.2 percent.