Indian shares are set to open marginally higher on Tuesday, with analysts expecting cautious sentiment ahead of key domestic and US inflation data due later in the week, while focus would be on commodity stocks on expectations of Chinese stimulus.
The Gift Nifty futures were trading at 24,708 as of 7:56 a.m. IST, indicating that the benchmark Nifty 50 will open above Monday’s close of 24,619.
“Cautious sentiment prevails in the markets ahead of key economic data such as consumer price inflation (CPI) readings from India and US,” said Siddhartha Khemka, head of research of wealth management at Motilal Oswal Financial Services.
The Nifty and BSE Sensex fell 0.25% each on Monday. US CPI data, due on Wednesday, will influence the Federal Reserve’s rate trajectory and could affect foreign inflows into emerging markets such as India.
The odds of a 25 basis point rate cut at the Fed’s policy meeting on Dec. 18 is at 86%, according to CME FedWatch.
India’s CPI data, due on Thursday, likely slowed to 5.53% in November after breaching the Reserve Bank of India’s 6% upper tolerance band in the previous month, a Reuters poll of economists showed. CPI data will be a crucial factor influencing the RBI’s rate cut timing, analysts said.
“Markets are likely to trade in a narrow range with a positive bias, with focus on commodity-linked stocks on expectations of stimulus measures from China,” Khemka said.
Indian shares set to open flat
Other Asian markets rose, led by Chinese equities on Beijing’s new promises of rate cuts and a boost to consumption. Wall Street equities closed overnight, dragged by technology stocks and as investors awaited the inflation report.
Foreign institutional investors bought Indian shares worth 7.24 billion rupees (about $85 million) on Monday, while domestic institutional investors sold stocks worth 16.48 billion rupees.
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