NEW DELHI: Indian shares should open higher on Wednesday on hopes the rupee's pullback from a slide will encourage foreign fund inflows, traders said.
However, investors will be cautious due to the government's inability to implement key policy reforms.
Retailers will be in focus ahead of Finance Minister Pranab Mukherjee's speech in parliament about the government's stand on retail reform, which was put on hold amid widespread criticism.
"Fortunately, the currency is showing some signs of appreciation, that could possibly help," said Deven Choksey, chief executive and managing director of brokerage K.R.Choksey.
The rupee, the worst performing currency is Asia this year, has recovered 2.6 percent to 51.42 against the dollar from its record low reached on Nov. 22, on the back of suspected central bank intervention.
"If the rupee stays above this level for some more time, then may be money will start flowing back to the market, which we saw in the last days," Choksey said.
Asian shares and the euro gained on Wednesday on hopes that the threat of mass credit rating downgrades will pressure European leaders to come up with a convincing framework for resolving the euro zone debt crisis at a crucial summit later this week.
By 0257 GMT, the MSCI's broadest index of Asia Pacific shares outside Japan was trading up 0.96 percent, while the Nifty India stock futures in Singapore were up 0.54 percent, pointing to a higher opening for the domestic market.
Indian shares had slipped 0.25 percent on Monday on profit-taking, after last week's best rally seen in nearly two-and-a-half years. The market was closed for a local holiday on Tuesday.
STOCKS TO WATCH
Ranbaxy Laboratories after the company said its unit had launched a generic version of Pfizer's blood pressure and cholesterol-lowering drug Caduet in the United States following an agreement between the two companies.
Drugmaker Cipla will be watched after Bayer AG's healthcare unit said it settled trademark infringement cases with the Indian company and Vanuatu-based website operator Archipelago Suppliers concerning the German drugmaker's pet products.
Cairn India after Vedanta Resources said it was satisfied with conditions under sale and purchase agreement for the acquisition of a controlling stake in Cairn India.
Transport Corp of India after its joint managing director told Reuters the company was bracing for a sharp fall in earnings growth this year as a slowing Indian economy takes a toll on demand.
Dewan Housing Finance Corp. after a unit said it planned to raise 2 billion rupees to invest in greenfield real estate projects.
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