Sensex down 100pts, Nifty at 25,350; Nifty Midcap, Metal, Realty climb

India equity benchmark indices BSE Sensex and Nifty 50 dropped at open from near their record highs at pre-open on Friday, following a marginally higher than expected inflation print, coupled with higher Index of Industrial Production (IIP) reading.

At 10 AM, the BSE Sensex was at 82,758, down 204 points, or 0.25 per cent, while the Nifty 50 was down 60 points, or 0.24 per cent, at 25,328.

Overnight, Wall Street eked out gains and gold surged to a record high on Thursday as investors awaited a Federal Reserve interest rate cut next week.

Major US stock indexes spent much of the day in mixed territory before closing higher, after a rate cut from the European Central Bank and slightly hotter-than-expected US producer prices kept outlooks locked on a modest Fed rate cut at its policy meeting next week.

At closing, the Dow Jones Industrial Average was up 0.58 per cent, the S&P 500 was up 0.75 per cent, and the Nasdaq Composite was up 1 per cent on the back of strong tech stock performance.

MSCI’s gauge of stocks across the globe was up 1.08 per cent.

However, markets in the Asia-Pacific region mostly fell on Friday morning. South Korea’s Kospi was flat, while the small cap Kosdaq was marginally lower.

Japan’s Nikkei 225 fell 0.43 per cent, and the broader Topix was also down 0.58 per cent.

Australia’s S&P/ASX 200 was the outlier and gained 0.75 per cent, nearing its all-time high of 8,148.7. Hong Kong’s Hang Seng index futures were at 17,294, higher than the HSI’s last close of 17,240. Futures for mainland China’s CSI 300 stood at 3,176, just slightly higher than the index’s last close, a near six-year low of 3,172.47 on Thursday.

In Asia, investors will react to inflation figures from India released late on Thursday, which showed that consumer price index rose 3.65 per cent in August, from 3.6 per cent in July. This also beat expectations of a 3.5 per cent rise from economists polled by Reuters.

Separately, the Index of Industrial Production (IIP) rose slightly to 4.83 per cent in July from 4.72 per cent in June.

Meanwhile, earlier on Thursday, the ECB announced its second rate cut in three months, citing slowing inflation and economic growth. The cut was widely expected, and the central bank did not provide much clarity in terms of its future steps.

For investors, attention quickly shifted back to the Fed, which will announce its interest rate policy decision at the close of its two-day meeting next Wednesday.

Data out of the US the last two days showed inflation slightly higher than expectations, but still low. The core consumer price index rose 0.28 per cent in August, compared with forecasts for a rise of 0.2 per cent. US producer prices increased more than expected in August, up 0.2 per cent compared with economist expectations of 0.1 per cent, although the trend still tracked with slowing inflation.

The dollar slid against other major currencies. The dollar index, which measures the greenback against a basket of currencies, was down 0.52 per cent at 101.25, with the euro up 0.54 per cent at $1.1071.

That apart, oil prices were up nearly 3 per cent, extending a rebound as investors wondered how much US output would be hindered by Hurricane Francine’s impact on the Gulf of Mexico. Oil producers Thursday said they were curtailing output, although some export ports began to reopen.

US crude ended up 2.72 per cent to $69.14 a barrel and Brent rose 2.21 per cent, to $72.17 per barrel.

Gold prices jumped to record highs Thursday, as investors eyed the precious metal as a more attractive investment ahead of Fed rate cuts.

Spot gold added 1.85 per cent to $2,558 an ounce. US gold futures gained 1.79 per cent to $2,557 an ounce.