Hot US Inflation Data Spooks Global Markets, Sensex Down 1,000 Points

Higher than expected US consumer price index for January, which surged to 7.5% year-over-year, according to the Labor Department pushed global indices lower as US Bond yields surged. The inflation reading came in at a 40-year high.

The US 10-year surged past the 2.03% mark, thus pushing global indices lower. Rising bond yields in the US always tend to have an impact on emerging market stocks, as investors sell emerging market stocks in favour of the safe sovereign bonds.

The Sensex was down more than 1,000 points, while the Nifty slid 288 points in trade by 11.30 am. Indian markets, which had staged a smart recovery in the last 2-days have once again fallen on rising bond yields in the US.

Among the stocks that dropped sharply from the Nifty were names like Infosys, Grasim, Nestle and Tech Mahindra. The Bank Nifty also saw cuts of nearly 1.75%, as compared to the benchmark indices falling 1.5%.

Among the stocks that did gain were IOC, IndusInd Bank and BPCL. Analysts expect the markets to continue to remain volatile and selling pressure from Foreign Portfolio investors to continue. Bond yields in the US are expected to remain elevated thus putting pressure on Indian stocks.