Indian shares seen muted after Fed holds rates steady, oil remains elevated
Indian equities are set for a subdued open on Thursday as investors weigh steady U.S. interest rates against persistent strength in crude oil prices. The combination keeps attention on inflation, borrowing costs and foreign fund flows after recent pressure on benchmark indexes.
Highlights
- GIFT Nifty futures at 22,708 signal a flat open for Nifty 50 after Wednesday's 22,698.85 close, following the Fed's rate hold.
- Brent crude futures remain elevated near $115 per barrel as Middle East risks persist, fueling inflation and rupee concerns for India.
- Foreign portfolio investors bought Indian shares worth 8.72 billion rupees ($91.58 million) on Wednesday but have net sold $3.74 billion in October.
Opening cues and market drivers
As reported by Reuters, GIFT Nifty futures stand at 22,708 as of 7:35 a.m. IST, pointing to a muted start for the benchmark Nifty 50 after Wednesday's close at 22,698.85.The U.S. Federal Reserve keeps interest rates unchanged, in line with expectations, and delays any move on borrowing costs until after next week's U.S. midterm elections as it waits for more inflation data. The central bank says inflation "remains elevated."
Higher U.S. rates tend to increase the appeal of Treasuries and the dollar, making emerging market equities such as India less attractive to foreign portfolio investors.
Oil prices and foreign flows in focus
Brent crude futures hover around $115 per barrel as traders assess Middle East conflict risks to regional energy supplies. Elevated oil prices remain a key concern for Indian markets because of their potential effect on inflation, interest rates and the rupee.Indian equity benchmarks have fallen in six of the last seven trading sessions as oil-related worries weigh on sentiment. Foreign portfolio investors buy Indian shares worth 8.72 billion rupees, or about $91.58 million, on Wednesday in a second straight session of purchases, according to provisional data, though they have still sold $3.74 billion of shares so far in October.
In our earlier article on the RBI’s rupee defence, we explained that the central bank had drawn an estimated $75–$80 billion from special FX measures introduced in June, using spot intervention and swaps as reserves declined. We noted that the rupee was facing pressure from elevated oil prices, higher U.S. Treasury yields and ongoing foreign equity outflows, prompting additional steps to curb dollar demand, including a special dollar window for oil companies.
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