Indian shares set for muted open as oil prices and Fed outlook weigh
Indian equities are set for a subdued start on Monday as elevated crude prices keep inflation concerns in focus. Investors are also watching this week's U.S. Federal Reserve decision, with higher U.S. rates seen as a potential headwind for emerging market assets such as India.
Highlights
- GIFT Nifty futures at 22,608 signal a muted start for Nifty 50 after a 2.4% weekly drop amid rising oil prices and Middle East tensions.
- Brent crude trades near $115 per barrel, retreating from a six-month high of $117, as Saudi Arabia supply risks maintain pressure on Indian equities.
- Foreign investors purchased Indian shares worth 8.9 billion rupees ($93.74 million) on Friday, being net buyers in three of the last five sessions despite inflation concerns.
Oil prices and Fed outlook shape early trade
As reported by Reuters, GIFT Nifty futures stand at 22,608 at 7:46 a.m. IST, pointing to a muted opening for the benchmark Nifty 50 after Friday's close at 22,600.The Nifty 50 and BSE Sensex fall 2.4% and 2.2%, respectively, last week, with losses in all four sessions as surging oil prices and Middle East tensions pressure sentiment. Brent crude futures trade around $115 a barrel, easing from a near six-month high of $117 reached after the Indian market close on Friday, although ongoing attacks on Saudi Arabia keep supply risks in focus.
Economists polled by Reuters expect the Fed to leave interest rates unchanged this week and deliver a hike in December. That outlook keeps attention on U.S. monetary policy because signals of patience are competing with persistent inflation pressures that support a tougher stance.
Foreign flows and market implications for India
Higher U.S. interest rates tend to reduce the appeal of emerging market equities such as India because the dollar and U.S. Treasuries become more attractive to global investors.Foreign investors buy Indian shares worth 8.9 billion rupees, or $93.74 million, on Friday, according to provisional data. They are net buyers in three of the last five trading sessions, offering some support even as oil-driven inflation worries continue to weigh on the market outlook.
Our earlier article on the RBI’s rupee-defence interventions detailed how the central bank deployed an estimated $75–$80 billion in spot sales and swaps from its special FX measures to cushion the currency amid elevated oil prices, higher U.S. yields, and foreign equity outflows. It also highlighted concerns that a sustained decline in usable reserves could test the RBI’s ability to defend the rupee, with market focus clustering around the 97-per-dollar area as a key tolerance zone.
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