New Delhi: On account of persistent inflation in the US, Indian stocks opened on Wednesday trade with a steep decline after posting gains for four consecutive days.

Although it slightly decreased from 8.5 to 8.3 percent in July, consumer inflation in the US is still above the target level of 2 percent.

Anticipating increase in interest rates

The US Federal Open Market Committee raised the key policy interest rate by 75 basis points to 2.25–2.50 percent at its most recent meeting in response to the nation’s over four-decade-high inflation, predicting that a further hike in rates will be justified.

The US Federal Reserve also increased interest rates during its meeting in June by 75 basis points, which was at the time the highest increase since 1994.

Another interest hike is imminent

Several officials in the US central bank Federal Reserve recently said that another interest rate hike is imminent during the two-day monetary policy meeting that will start on September 20.

The US markets ended sharply lower on Tuesday after the latest inflation data in the world’s largest economy showed a less-than-expected moderation in the price-rise index — that’s at a multi-decade high, said Mohit Nigam, Head – PMS, Hem Securities.

SENSEX, NIFTY goes down

Coming to the domestic indices, at 9.24 am, Sensex traded at 59,977.47 points, down 593.61 points or 0.98 per cent, whereas Nifty traded at 17,904.35 points, down 165.70 points or 0.92 per cent.

Among the Nifty 50 companies, 38 declined and the rest 12 advanced this morning, National Stock Exchange data showed.

‘Inflation is getting entrenched’

“The worse-than-expected CPI inflation data in the US, despite cooling gas prices, was a surprise. Now the market fears that inflation is getting entrenched and an ultra-hawkish Fed might trigger a hard landing for the US economy,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

For fresh cues, investors will await India’s wholesale inflation data for August scheduled for release later today. India’s wholesale inflation declined substantially during the month of July to 13.93 per cent from 15.18 in June, but continues to remain in double digits.

The Wholesale Price Index (WPI) based inflation has been in the double-digit for 16 months in a row now.