Zerodha founder Nikhil Kamath shared his take on the sell-off in equity markets.

Kamath, in a tweet opined the current sell-off in the global equity markets and in India was on the back of lower margins due to inflation.

“Last night’s fall is on the back of lower margins for retailers. Bound to happen in India, inflation will eventually lead to lower margins, or passing on higher costs will taper demand,” wrote Kamath.

Benchmark indices in India plunged 2 per cent during the morning trade on Thursday, weighed down by a sell-off in the broader market selloff. Investors dumped risky assets due to concerns regarding inflation and slowdown.

Asian equities also tumbled after a heavy sell-off overnight in the US markets with the Nasdaq and the S&P 500 slipping 3 per cent amid slowdown concerns.

US Federal Chief Jerome Powell’s hawkish stance has impacted investor sentiments.

Chair Jerome Powell on Tuesday underscored the Federal Reserve’s determination to keep raising interest rates until there is clear evidence inflation is steadily falling. The Fed is likely to agree with taking the rate of interest to 4 per cent instead of 3 per cent over the next 12-18 months.

Analysts also expect Indian central bankers to hike interest rates quicky and sharply.