Indian stock benchmarks fell for the third straight session on Tuesday, following a broader slump in fragile global equity markets with concerns over higher lending rates, global recession risks and geopolitical tensions alarming investors.
The BSE Sensex index fell about 90 points and the broader NSE Nifty index fell 0.2 percent, marking the third session of losses in a row.
In the previous session, both stock benchmarks closed lower but had wiped out significant losses from earlier on Monday.
After a fourth consecutive decline in US equities, equities in Asia fell amid ongoing concerns that rising interest rates and geopolitical threats will hamper global economic growth.
When post-holiday trading resumed due to new restrictions on China’s access to US technology, stocks in Japan, South Korea and Taiwan fell, with chipmakers leading the decline. Hong Kong stocks continued to fall and US futures fell.
A measure of dollar strength that remained close to its highest this month as market sentiment remained risk averse.
“Our expectation that the global economy will slide into recession next year is consistent with a further appreciation of the dollar,” said Commonwealth Bank of Australia strategist Carol Kong.
Investor sentiment remained shaky ahead of Indian inflation data and US inflation statistics from Thursday.
If US data comes in hotter than expected, the argument for another 75 basis point rate hike will certainly be convincing.
World Bank and IMF presidents warned of a growing threat of a global recession as industrialized economies slow and higher inflation prompts the Fed to continue raising interest rates, increasing the debt burden of developing countries.
“A recession is very possible — our subjective probability for the coming year is 35 percent — but we think it will require additional shocks,” Jan Hatzius, chief economist at Goldman Sachs Group, wrote in a note, according to Bloomberg.
Renewed upward pressure on fuel prices is a focus, and Goldman also sees “a small but growing risk of unnecessarily overrunning monetary policy if Fed officials focus too much on lagging inflation indicators.”
Demand concerns, especially in China, weighed on oil prices, with the crude oil benchmark falling from their recent highs on Tuesday.