India Inflation Hits Two-Year High as Stock Markets Slump

India's retail inflation rose to 6.09 per cent in October, marking a two-year high and breaching the Reserve Bank of India's upper tolerance limit of 6 per cent. This surge was driven largely by food inflation, which spiked to 8.94 per cent. The data has increased the likelihood of a policy rate hike during the central bank's December 4 meeting, although some market participants believe the impact was partially priced in following a rate increase in October.

Indian equity markets reacted with volatility. After the benchmark Nifty 50 index reached its highest level since February 26—supported by over $7.5 billion in foreign inflows this month—the Sensex and Nifty traded lower on November 13. The Sensex declined by approximately 450 to 460 points, while the Nifty fell between 179 and 182 points. Analysts attribute the slump to profit-booking, weak global cues, and the inflationary data.

External pressures further weighed on the markets, including rising inflation in the United States and geopolitical tensions affecting Saudi energy infrastructure and the Strait of Hormuz. These factors pushed Brent crude prices to approximately $95 per barrel. While Nifty Realty saw significant losses, healthcare and pharmaceutical shares remained higher.