Sensex, Nifty Set To Follow Wall Street Lower On US Recession Fears

(RTTNews) - Indian shares may open on a tepid note Wednesday as investors look ahead to the Reserve Bank of India's monetary policy announcement later in the day.

Economists expect a 35-basis point hike in rates and a dovish view on future policy action.

A strengthening dollar may also weigh on sentiment as investors await the outcome of next week's Federal Reserve meeting.

While the Fed is widely expected to slow the pace of interest rate hikes, recent upbeat economic data has raised concerns about how much further the central bank will raise rates at future meetings.

A lot of key U.S. data is due to be released before the next meeting in late January/early February.

Benchmark indexes Sensex and Nifty fell around 0.3 percent each on Tuesday while the rupee fell about 1 percent on foreign fund outflows as upbeat U.S. jobs and service sector data rekindled fears of aggressive Fed rate hikes.

Asian markets traded mostly lower this morning, the dollar edged lower, and gold struggled for momentum as top executives from the biggest U.S. banks warned that stubbornly high inflation could trigger a U.S. economic recession next year.

U.S. stocks fell sharply overnight to extend losses from the previous session as signs of a resilient economy cast doubt on the Fed easing rate hikes.

The Dow lost 1 percent, the tech-heavy Nasdaq Composite tumbled 2 percent and the S&P 500 shed 1.4 percent.

European stocks closed lower on Tuesday after ECB chief economist Philip Lane said in an interview that interest rates will need to rise several more times to rein in inflation.

The pan European STOXX declined 0.6 percent. The German DAX slipped 0.7 percent, France's CAC 40 index eased 0.1 percent and the U.K.'s FTSE 100 dipped 0.6 percent.