India’s equity benchmark indexes are likely to open higher on Wednesday, rebounding from a 1% drop in the previous session, but concerns over foreign outflows may keep gains capped.
Gift Nifty futures were trading at 24,802 as of 8:01 a.m. IST, indicating that the Nifty 50 will open above its previous close of 24,683.9.
The Nifty 50 and the BSE Sensex slipped on Tuesday as foreign portfolio investors offloaded 100.2 billion rupees ($1.2 billion) of shares, as per provisional data, the biggest single-day outflow since February 28.
Rising bond yields in the United States and Japan, and expensive valuations of Indian equities likely triggered foreign outflows, as per analysts.
Financials, IT lead slide in Indian equities on likely foreign outflows
U.S. bond yields edged higher overnight on concerns that a tax-cut bill being debated in Congress will worsen the budget deficit, while long-dated Japanese government bond yields eased after hitting record highs on Tuesday amid concerns over funding for new fiscal stimulus.
Indian equity benchmarks rose about 4% last week to seven-month highs.
Market participants expect mutual funds to buy any dips in the market as they are sitting on a large cash pile.
The cash holdings of mutual funds in equity schemes rose to 3.92% at the end of April from 3.57% a month earlier, as per PRIME Database Group.
Domestic institutional investors bought 67.4 billion rupees of Indian shares on Tuesday.
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