Nifty 50 falls 0.37% as Indian inflation rises to 6.09%
Key Facts
Indian shares fell on Friday morning, November 13, as oil prices climbed and inflation concerns resurfaced, while foreign investor buying supported the market. By 9:54 a.m. India time, the Nifty 50 was down 0.37% at 25,209.25 points, and the Sensex fell 0.21% to 81,740.02 points. The move followed data showing October retail inflation had exceeded the upper limit of the Reserve Bank of India’s tolerance band. Reuters said higher crude prices and inflation pressures weighed on investor sentiment. The session highlighted the market’s sensitivity to a combination of domestic pressures and global energy prices.
The decline extended across most sectors, with 10 of 16 sectors posting losses in trading. The heavyweight financial sector fell 0.8% after rising 3.2% over the previous three sessions. By contrast, small-cap shares rose 0.3% and mid-cap shares gained 0.1%, showing divergent performance across market segments. Foreign investor buying remained a supportive factor, Reuters reported, but did not prevent the two main indexes from falling. The moves reflected divergence between sectors rather than a broad-based decline across all equity segments.
Brent crude futures traded near $95.7 a barrel on Friday, up from $92 the previous day. Reuters linked the rise in crude to concerns threatening global oil flows, while higher prices weighed on investor sentiment in India. This adds to the sensitivity of the Indian market, as the session’s news was tied to domestic inflation concerns. In October data, annual retail inflation rose to 6.09%, exceeding the Reserve Bank of India’s 6% ceiling for the first time under the new consumer price index series. The breach puts the inflation reading at the center of market monitoring of the monetary policy path.
October’s reading was above the 5.93% forecast in a Reuters poll, following annual inflation of 5.54% in September. Inflation remained above the central bank’s medium-term target of 4% for the fifth consecutive month. The last recorded breach of the 6% ceiling was in October 2024, when inflation reached 6.2% under the previous index series. Food inflation also rose to 8.94% in October from 7.74% in September, driven largely by food prices, which account for nearly 40% of the consumer price index. Staples whose prices rose included onions, garlic and ginger, according to a Reuters report.
Alongside inflation, trade data published on November 13 showed the merchandise trade deficit widened to $39.88 billion in October, its highest level in a year. Exports stood at $49.47 billion, a monthly record, while imports rose to $89.35 billion. Trade Secretary Rajesh Agrawal said India recorded its highest-ever monthly merchandise exports in October. However, the deficit exceeded economists’ forecast of $32.25 billion, compared with a deficit of $30.21 billion in September. The figures show the trade gap widening alongside record exports.
The inflation reading strengthened expectations of tighter monetary policy, with Reuters saying the data would bolster bets on a rate hike and reporting that economists expected another increase in December. Radhika Rao said the data “reinforces our call for a second consecutive rate hike in December.” Central bank Governor Sanjay Malhotra warned that weak monsoon rains and a strong El Niño pose risks to agriculture and rural demand. He added that ample grain stocks and government measures are expected to mitigate the impact. December remains the next milestone markets are watching as they assess the inflation path.