India’s benchmark indexes are set for a muted open on Thursday, likely to track subdued Asian peers, after the U.S. Federal Reserve left rates steady and offered little clues about further reductions in borrowing costs this year.
The GIFT Nifty futures were trading at 23,155.5, as of 8:08 a.m. IST, indicating that the blue-chip NSE Nifty 50 will open near Wednesday’s close of 22,163.1.
Wall Street equities closed lower overnight, while Asian markets were muted on Thursday, after the U.S. central bank stood pat on its rates, as expected.
“There would be no rush to cut rates again until inflation and jobs data made it appropriate,” Fed Chair Jerome Powell said.
Powell also said that Fed officials are waiting for Trump’s policies to assess their impact on inflation and economic activity.
Markets expect the Fed to lower interest rates by only about 50 basis points by the end of the year.
Higher U.S. interest rates make emerging markets such as India less attractive for overseas investors, leading to a decline in foreign portfolio investors (FPI) inflows.
FPIs have offloaded Indian shares worth $8.60 billion in January so far, set for the second highest monthly outflows on record.
A moderation in domestic earnings and elevated U.S. Treasury yields have given FPIs no reason to turn to domestic equities, said two analysts.
IT leads Indian shares higher; Fed policy eyed
India’s Nifty 50 and Sensex have lost nearly 2% each so far in January and are on course for the longest monthly losing streak in 23 years.
The January futures and options contracts expire on Thursday, and volatility remains elevated on monthly expiry days as traders roll over their positions in the derivatives segment to the next month.
Volatility in Indian markets has risen for five consecutive sessions, hitting 19.01 on Wednesday, the highest since early-November 2024.
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