Benchmark stock indices opened Wednesday's session tracking weak overnight cues from the US markets, which saw a heavy selloff.
At 9.26 am, the Sensex and Nifty fell in a range of 0.4-0.5 per cent. Barring the Nifty pharma index, the rest are in the red this morning.
"US equities kicked off the holiday-shortened week by posting sharp losses, leaving the major indices with their worst day so far of 2023," said Devarsh Vakil, deputy head of Retail Research, HDFC securities.
"Uncertainty regarding the Fed's future rate hike decisions appeared to pressure market sentiment, as investors grappled with recent hot inflation data," Vakil said.
Notably, the US central bank's policy rate is now in a target range of 4.50-4.75 per cent, the highest level in 15 years, and notably, it was near zero in the early part of 2022.
The US Federal Reserve has been consistently tightening monetary policy to control inflation.
Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
"The US macro data continues to dictate equity markets globally. The US markets reacted sharply negatively to the series of economic data indicating that the process of disinflation is slow and, therefore, the Fed will have to continue raising rates longer than expected earlier," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
( With inputs from ANI )
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor