Indian shares set to open higher as moderate US inflation spurs global rally

India’s stock benchmarks are likely to open higher, tracking Asian peers after moderate U.S. retail inflation data bolstered the odds of a September rate cut by the Federal Reserve, while easing domestic inflation is also expected to lift sentiment.

Gift Nifty futures were trading at 24,629, as of 7:55 a.m. IST on Wednesday, indicating that the Nifty 50 will open above Tuesday’s close of 24,487.4.

Asian markets rose, with the MSCI Asia ex-Japan index gaining 0.6%. Wall Street closed higher, with the S&P 500 and Nasdaq Composite indexes hitting record peaks after U.S.

consumer prices increased marginally in July, up 0.2% month-on-month.

The in-line print lifted September Fed rate cut odds to 94% from 86% a day earlier.

Lower U.S. rates typically boost the appeal of emerging market equities, including India, as yields on U.S. Treasuries fall.

India’s retail inflation dropped to an eight-year low of 1.55% in July, slipping below the Reserve Bank of India’s 2%-6% band, driven by falling food prices.

“While the July print by itself doesn’t alter the rate trajectory, sustained low inflation, especially if compounded by downside growth risks from external shocks, would strengthen the case for further easing,” said Arsh Mogre, economist at PL Capital.

Meanwhile, investors await talks between the U.S. and Russian presidents, scheduled Friday, to discuss a potential resolution to the war in Ukraine.

The meeting is being closely watched by Indian market participants after Washington imposed an additional 25% tariff on goods from the country over its Russian oil imports. Positive U.S.-Russia talks could help ease U.S.-India trade tensions, according to multiple analysts.

Domestic institutional investors remained net buyers of Indian stocks for 27 straight sessions, purchasing 35.08 billion rupees ($401 million) of stocks on Tuesday.

Foreign portfolio investors remained net sellers with outflows of 33.99 billion rupees ($388 million) on Tuesday, according to provisional data from the NSE.