India’s stock benchmarks set to open higher on Fed rate cut hopes

India’s equity benchmarks are poised to open higher on Wednesday, tracking Asian peers on rising expectations of an imminent Federal Reserve rate cut.

Gift Nifty futures were trading at 26,165, as of 08:00 a.m. IST, indicating that the Nifty 50 could open above Tuesday’s close of 25,884.8.

Other Asian markets rose 0.9%, tracking an uptick in Wall Street equities after data showed U.S. retail sales rose less than expected and consumer confidence weakened, bolstering expectations of a Fed rate cut in December.

Comments from two Fed policymakers favouring a December rate cut also aided sentiment.

Lower interest rates in the U.S. make emerging markets such as India more attractive for foreign investors.

After coming within 0.5% of all-time highs last week, the Nifty and Sensex indexes lost ground in three straight sessions on profit booking. They are now about 1.6% below the all-time highs reached in September 2024.

Before the recent retreat, bullish stock investors rode a steady rally since the start of October, helped by improving earnings, record-low inflation and stable domestic flows.

The Indian government’s consumption tax reductions and the central bank’s rate cuts this year will boost private investment and economic growth, the Reserve Bank of India said in its monthly bulletin earlier this week.

India’s July-September GDP growth data is due on Friday. A Reuters poll suggests the economy grew 7.3%, after expanding 7.8% in April-June.

Recent comments from RBI Governor Sanjay Malhotra, signalling scope for further rate reduction, could also power rate-sensitive sectors in the run-up to the central bank policy decision next week, said two analysts.

Foreign portfolio investors turned net buyers of Indian stocks on Tuesday, after two sessions of outflows, with inflows of 7.85 billion rupees ($88 million). Domestic institutional investors purchased stocks worth 39.12 billion rupees, provisional data, from the NSE showed.