The Sensex fell 530 points and the Nifty lost 172 points in opening trade on Wednesday, as investors worried about further rate hikes by the US Federal Reserve to curb inflation and weak global signals.

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The Sensex dropped 530.36 points, or 0.88%, to 60,040.72 after four consecutive days of advances, while the Nifty dipped 150.75 points, or 0.83%, to 17,919.30. As many as 21 Sensex stocks, including Reliance Industries, tumbled in early trade amid high volatility.

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Asian markets were in the red over expectations of aggressive Fed rate rises to combat inflation, which was higher than anticipated in August.  The Nikkei 225 fell 707.09 points or 2.47% to 27,907.54, the Straits Times tumbled 37.11 points or 1.13% to 3,252.97, the Hang Seng dropped 492.23 points or 2.55% to 18,834.63, the Taiwan Weighted slid 251.82 points or 1.69% to 14,642.59, the KOSPI plummeted 35.54 points or 1.45% to 2,414.00, and the Jakarta Composite declined 52.88 points or 0.72% to 7,265.14.

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The US and European markets closed in the red on Tuesday. The S&P 500 fell 177.72 points, or 4.3%, to 3,932.69. The Dow Jones Industrial Average fell 1,276.37 points, or 3.9%, to 31,104.97. The Nasdaq fell 632.84 points, or 5.2%, to 11,633.57. The Russell 2000 index of smaller companies fell 74.51 points, or 3.9%, to 1,831.57.

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The Sensex rose 455.95 points, or 0.76%, to a five-month high of 60,571.08, while the Nifty gained 133.70 points, or 0.75%, to 18,070.05 on Tuesday. The BSE benchmark has climbed almost 1,540 points, or 2.59%, in the last four sessions, while the Nifty has added 445 points or 2.9%.

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“The US inflation in August rose higher at 8.3% year-on-year against the expectation of 8.1 %. It increased 0.1% month-on-month whereas economists were expecting it to decline by 0.1%”, Ritika Chhabra – Economist and Quant Analyst at Prabhudas Lilladher, said.

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“With inflation being stickier than expected, it is highly likely that the Fed will go for another jumbo rate hike of 75 basis points in its next FOMC (Federal Open Market Committee) meeting,” Chhabra said.

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The foreign institutional investors (FIIs) bought shares worth a net Rs 1956.98 crore, while domestic institutional investors (DIIs) sold shares worth a net Rs 1268.43 crore in the Indian equity market on September 13, as per provisional data available on the NSE.  

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Brent crude prices were up slightly at USD 93.32 per barrel. The rupee fell 43 paise to 79.60 versus the US dollar in early trade on Wednesday, as a higher US CPI figure fueled massive risk-off sentiment.