Indian shares seen opening higher as oil slump boosts market outlook

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Indian shares outlook on oil slump

Highlights

GIFT Nifty futures at 24,295.5 indicate a positive open for Nifty 50, which closed at 23,960.6 on Wednesday.
Brent crude futures fell 1% to $93.5 per barrel, extending an 8.7% slide, easing inflation and improving corporate margin outlooks for India.
Foreign investors purchased $769.65 million in Indian equities on Wednesday, marking the fourth consecutive session of inflows and signaling a potential return after recent outflows.

Market setup and drivers for Thursday trade

As reported by Reuters, GIFT Nifty futures stand at 24,295.5 as of 8:01 a.m. IST, pointing to a positive opening for the benchmark Nifty 50 after it closed at 23,960.6 on Wednesday.

Brent crude futures fall 1% to $93.5 a barrel after tumbling 8.7% in the previous session. Lower oil prices are closely watched in India because they can ease pressure on inflation, import costs and corporate margins.

Provisional data show foreign investors bought Indian shares worth 72.84 billion rupees, or $769.65 million, on Wednesday. The buying marks a fourth straight session of inflows and suggests overseas investors may be returning after a heavy sell-off earlier this year.

Global political shift and implications for India

U.S. and European stocks rally on Wednesday after Democrats seize control of both chambers of Congress in the U.S. midterm elections, a result investors view as reducing political uncertainty. Market participants are also betting the outcome could hasten an end to the U.S.-Israeli war on Iran, a factor that has weighed on oil markets.

Democrats' victory is widely seen as a rejection of President Donald Trump, whose tariff policies and Middle East war decision also contribute to Indian market underperformance this year. Domestic benchmarks are now showing signs of recovery, with the Nifty 50 and BSE Sensex up 5.6% over the last five sessions, their longest winning streak in nearly five months.

Hariselvan Radhakrishnan, founder and CEO of HST Wealth, says the scale of the latest drop in oil prices could materially improve India's near-term macroeconomic and earnings outlook if it is sustained.

The Reserve Bank of India’s heavy intervention to defend the rupee was the focus of our earlier article, estimating the RBI has deployed $75–$80 billion from its special FX measures since June while reserves fell and usable buffers tightened. We noted the rupee was under strain from elevated oil prices, higher U.S. Treasury yields, and persistent foreign equity outflows, prompting steps such as spot sales, swaps, and a special dollar window for oil companies as the 97-per-dollar area emerged as a key tolerance level.

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