Sensex dips on macro data woes

Mumbai: The markets slumped sharply for the second straight day amidst weakness in banking sector stocks as experts cautioned about the possibility of an interest rate hike by the RBI after the consumer price inflation soared to a 15-month high in November.

The Nifty slipped below its crucial support level of 10,200 to end the day at 10,192.95, down 47.20 points or 0.46 per cent while the Sensex lost 174.95 points or 0.53 per cent to end the day at 33,053.04. “We expect inflation to edge up further, reaching around the 5 per cent handle in December. The MPC statement already suggests that the debate is shifting toward the timing of an eventual rate hike, which we peg at second half of FY19. To assess the next move by the central bank, we will be watching the growth outcomes and fiscal policy stance,” said analysts at Morgan Stanley.

BNP Paribas senior fund manager Karthikraj Lakshmanan also said, “India’s industrial production showed a deceleration in growth from a 4.1 per cent increase in September 2017. This becomes a very tricky situation for RBI to handle. Higher inflation discourages the central bank to reduce rates as it might further spike inflation.”