BENGALURU, May 11 (Reuters) - Indian shares snapped a four-session rally on Tuesday as financial and IT stocks slid amid worries that a potential acceleration in U.S. inflation could lead to foreign fund outflows from the region.
Stock markets in Asia and Europe dropped as U.S. inflation expectations surged to their highest in a decade with the economy reopening from pandemic-driven shutdowns, fanning concerns that interest rate hikes could arrive earlier than expected.
April consumer price data for the United States is due on Wednesday.
"Markets will keenly watch the inflation data from the U.S. as any unexpected rise could lead to potential interest rate hikes and stoke fears of institutional money moving out. This could lead to pressure on the Indian banking space in particular," said Gaurav Garg, head of research, CapitalVia Global Research.
This comes even as the Reserve Bank of India is expected to maintain status quo on rates as inflation is likely to remain within its target.
Over the last four sessions, India's Nifty and Sensex had gained about 3% and 2.5%, respectively, even as domestic coronavirus cases surged.
($1 = 73.4850 Indian rupees)
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