Sensex, Nifty Seen Opening On Cautious Note On Fed Worries

(RTTNews) - Indian shares look set to open on a flat note Thursday, as a bigger than expected increase in U.S. consumer prices added to concerns about the outlook for interest rates.

Investors bet that the Federal Reserve will raise interest rates by 75 basis points when it meets July 26-27. There is also the risk of another 75-basis point rate hike in September.

Some economists say that Fed officials could weigh a historic one percentage-point rate hike later this month that could push the U.S. economy into a recession.

Benchmark indexes Sensex and the Nifty fell 0.7 percent and 0.6 percent, respectively on Wednesday to extend loses for a third day running, while the rupee ended at a record low of 79.63 against the greenback.

Asian markets traded mixed this morning, the dollar index held firm and oil prices ticked down as inflation fears take center stage.

U.S. stocks ended lower overnight as data showed consumer inflation reached 9.1 percent in June, its highest rate in nearly 41 years, and the Fed's economic survey highlighted growing recession fears.

The major averages ended firmly in negative territory but well off their worst levels. The Dow slipped 0.7 percent, the tech-heavy Nasdaq Composite eased 0.2 percent and the S&P 500 gave up half a percent.

European stocks edged lower on Wednesday as the euro extended declines to reach parity with the dollar for the first time in two decades on the back of hotter-than-expected U.S. inflation data.

The pan European Stoxx 600 gave up 1 percent. The German DAX tumbled 1.2 percent, while France's CAC 40 index and the U.K.'s FTSE 100 both fell around 0.7 percent.