Sensex, Nifty Set For Steep Sell-off As Dollar Resumes Rally

(RTTNews) - Indian shares look set to open on a tepid note Wednesday as markets price in slower growth in the near term because of higher interest rates and inflation.

The Reserve Bank of India (RBI) has a challenging task to balance growth and inflation while announcing its interest-rate decision on Friday. Economists expect a 50-bps hike in the repo rate to support a falling rupee.

Benchmark indexes Sensex and Nifty ended Tuesday's choppy session marginally lower, while the rupee settled 9 paise higher at 81.58 against the greenback, snapping a four-day losing streak.

Asian markets fell this morning and the dollar rally resumed, as the White House talked down the prospect of a currency agreement to weaken the greenback and comments from Federal Reserve Bank of St. Louis President James Bullard and San Francisco Federal Reserve Bank President Mary Daly underscored the need for tighter policy.

Apple Inc. scrapped plans to increase iPhone production, further weighing on sentiment. Oil prices tumbled in Asian trade after having risen sharply on Tuesday.

U.S. stocks gave up early gains to end mixed overnight as the dollar rebounded and Treasury yields surged after an initial move to the downside after the release of strong economic data.

New orders for U.S. manufactured durable goods showed a modest decrease in August, while new home sales unexpectedly rose in the month and a measure of consumer confidence improved more than expected in September.

The Dow dipped 0.4 percent and the S&P 500 eased 0.2 percent to reach their lowest closing levels since late 2020 while the tech-heavy Nasdaq Composite rose 0.3 percent.

European stocks fell on Tuesday after a volatile session on concerns about monetary tightening and a possible recession.

The pan European Stoxx 600 edged down 0.1 percent. The German DAX shed 0.7 percent, France's CAC 40 slipped 0.3 percent and the U.K.'s FTSE 100 dropped half a percent.