India stock benchmarks to open higher on rising bets for US rate cut

India’s equity benchmarks are likely to open higher on Friday, tracking global gains, as softer US jobs data overshadowed a hotter-than-expected inflation reading and bolstered bets for Federal Reserve rate cuts.

Gift Nifty futures were trading at 25,194 points as of 07:58 a.m. IST, indicating that the benchmark Nifty 50 will open above Thursday’s close of 25,005.5.

The number of Americans filing for jobless benefits rose sharply last week, confirming the softness in the labour market, while US retail inflation rose 0.4% month-on-month in August.

The higher-than-expected jobless claims firmed expectations that the Fed will cut interest rates next week and raised the bets for more cuts in October and in December.

The prospects of a US rate cut next week lifted shares in Asia, with MSCI’s broadest index for Asia-Pacific stocks outside Japan gaining about 1%.

Lower US interest rates make emerging markets such as India attractive for foreign portfolio investors (FPIs), as Treasury yields and dollar typically fall in such a scenario.

FPIs sold Indian shares worth 34.72 billion rupees ($393.2 million) on Thursday, per provisional data, while domestic institutional investors remained buyers for a thirteenth consecutive session.

The benchmark indexes have risen 1.7% in the last seven sessions, with the Nifty 50 logging its longest daily winning run in more than four months.

Meanwhile, investors are awaiting domestic retail inflation data for August, due after markets close.

Consumer inflation is likely to have risen to 2.1% in August from 1.55% in July, below the Reserve Bank of India’s 4.0% medium-term target, a Reuters poll of economists showed.