Global inflation concerns pull down markets; Sensex falls 471 points

The benchmark indices fell for a second day on Wednesday amid a sell-off in global markets, particularly tech stocks, on worries over a possible rise in inflation in the US due to rising commodity prices. Investors feared that a surge in inflation in the US would force central banks to raise interest rates and trigger a flight of capital from emerging markets, including India.

The benchmark Sensex fell 471 points, or 1 per cent, to end the session at 48,691. The Nifty ended the session at 14,696, with a decline of 154 points, or 1 per cent.

Most Asian equity benchmarks traded lower in early deals following an overnight 1.4 per cent decline in the Dow Jones Index. The markets remained volatile as investors grew cautious ahead of the release of US Consumer Index figures for April.

The Taiwanese market closed 4.1 per cent lower, after dropping as much as 8.6 per cent — the worst intraday loss since 1969, amid concerns over rising Covid-19 cases and mounting worries over tech stocks. 

The debate on whether inflation will force the Federal Reserve to tighten policy sooner than current guidance comes at a time when stimulus measures have powered a rally in global equities. 

“All major indices belled the day in negative terrain, including metals. International commodity prices will have to stabilise to provide sustenance in the equity market,” said Vinod Nair, head of research, Geojit Financial Services. The rising covid cases domestically and the slow rollout of vaccination also weighed on investor sentiment.