Indian shares set for muted start as Fed rate hike projection offsets oil slump
Indian shares are set for a flat open, balancing the boost from lower oil prices due to a US-Iran deal and the Fed's rate pause against potential future rate hikes.
- Lower oil prices and their impact on Indian equities.
- US Federal Reserve's interest rate decisions and outlook.
- Foreign and domestic institutional investor activity.
Indian shares are set for a flat open on Thursday as investors weigh the boost from lower oil prices and the U.S. Federal Reserve’s decision to hold rates steady against signs that it could still raise borrowing costs later this year.
GIFT Nifty futures were trading at 24,057 as of 7:25 a.m. IST, suggesting that the Nifty 50 may open near Wednesday’s close of 24,085.70.
Higher U.S. rates typically reduce the relative appeal of emerging markets such as India, keeping risk appetite in check. Still, sentiment remains supported by a sharp easing in oil prices.
Brent crude fell about 1.3% to $78.5 a barrel after the United States and Iran signed an interim agreement to end the war, reopen the Strait of Hormuz and waive U.S. sanctions on Tehran’s oil exports, resolving what had become the largest energy supply disruption in history.
The drop in crude has helped fuelled a rebound in Indian equities. The Nifty 50 and Sensex have risen 4% and 4.5%, respectively, over the last four sessions, as lower oil prices eased concerns over inflation and external balances for India, the world’s third-largest oil importer.
Other Asian markets were flat, while Wall Street equities closed lower overnight after the Fed’s rate pause and accompanying commentary.
U.S. short-term interest rate futures are now assigning a greater probability to a September rate hike than to rates remaining unchanged, according to CME Group’s FedWatch tool.
Meanwhile, foreign portfolio investors bought Indian shares worth 1.02 billion rupees ($10.8 million) on Wednesday, while domestic institutional investors purchased a net 15.61 billion rupees of stocks, NSE provisional data showed.
Among individual stocks, BSE will be in focus after the National Stock Exchange filed its draft prospectus for an initial public offering with the markets regulator on Wednesday.
The issue comprises 148.9 million shares, with State Bank of India set to offload 24.75 million shares.