UK and Canada on Wednesday were rocked by 30-year-old high inflation prints that raised the possibility of rates hikes by the two countries that may precede rapid policy tigheting by other nations including India.

The UK reported 5.4 per cent inflation in December, the highest since March 1992, while Canada reported 4.8 per cent inflation, the highest print since it reached 5.5 per cent in September 1991, bolstering expectations of a wave of rate hikes as central banks go on the overdrive to suck out liquidity to check prices and protect the living standards of their citizens.

Oil prices also rose for the fourth day on Wednesday Brent crude futures were up 81 cents, or 0.9 per cent, to $88.32 a barrel at 1432 GMT. The benchmark contract earlier touched $89.05, its highest since October 13, 2014.

In India, the stock markets have reacted adversely: The BSE gauge Sensex plummeted over 656 points and the NSE Nifty dropped below the key 18000-mark on Wednesday as global market rout cast a shadow on domestic equities.

“Globally, risk sentiments took a blow as rising inflation resulting in elevated bond yield along with the on-going geopolitical tensions and surge in oil prices weighed on investor confidence. This along with consistent FII selling forced the domestic market to trade in favour of bears for the second consecutive day,” Vinod Nair, head of research at Geojit Financial Services, said.

Although the rupee logged it first gain in four days, its gains were restricted by a host of factors, including weak domestic equities, surging crude oil prices and sustained selling by FIIs in domestic markets. The rupee rose 14 paise to 74.44 to the dollar on Wednesday.