Indian equity benchmarks set to open higher on EU trade deal, positive global cues

BENGALURU: India’s equity benchmarks are likely to open higher on Wednesday, extending gains seen in the previous session after a landmark trade deal with the European Union, while positive global sentiment may also provide support.

Gift Nifty futures were trading at 25,441.5, as of 7:56 a.m. IST, indicating that the Nifty 50 could start above Tuesday’s close of 25,175.4.

The 50-stock benchmark index rose 0.5% on Tuesday as a trade deal with the EU scrapped all tariffs on 90% of Indian goods.

“The potential for growth is substantial,” analysts at HSBC said in a note.

“The benefits could eventually go beyond goods trade, including larger FDI flows, more services trade, and strategic diversification.”

MSCI’s broadest index for Asia Pacific stocks outside Japan was up 0.9% ahead of the U.S. Federal Reserve’s policy decision later in the day, while the U.S. dollar sank to a four-year low.

Global markets sentiment was also boosted by easing trade tensions after U.S. President Donald Trump said the United States and South Korea will work out a solution, after earlier threatening to raise tariffs on imports from the Asian country to 25%.

“Improving global risk sentiment is likely to encourage fresh buying from oversold levels (in India) and prompt short-covering across derivative segments,” said Ponmudi R, chief executive officer of Enrich Money.

Meanwhile, continued selling by foreign portfolio investors (FPIs) and caution ahead of the country’s federal budget presentation on Sunday could keep investors cautious.

Foreign investors sold Indian shares worth 30.69 billion rupees ($335.53 million) on Tuesday, as per provisional data. They have offloaded $4.1 billion worth of shares in January, marking the biggest monthly selloff in a year.