Sensex, Nifty set to open higher with foreign inflows into equities seen rising

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Indian shares are set to open higher on Thursday on expectations of a rise in foreign inflows into domestic equities after US inflation data firmed bets of a 25 basis point Federal Reserve rate cut.

The GIFT Nifty was at 25,076 points, as of 08:20 a.m. IST, indicating the NSE Nifty 50 will open above its previous close of 24,918.45.

The benchmark Nifty 50 lost about 0.5- per cent in the previous session, on profit booking ahead of the US inflation data, which was released after Indian market hours.

US consumer prices rose slightly in August, but underlying inflation showed some stickiness. The odds for a 25-basis-point rate cut by Fed on Sept. 18 rose to 85 per cent from 66 per cent a day ago, while the case for an aggressive 50 bps reduction dwindled to 15 per cent from 34 per cent, according to CME FedWatch.

Asian markets opened higher, with the MSCI Asia ex-Japan index rising 1 per cent, while Wall Street equities logged gains overnight.

Indian equities are poised to attract a major share of inflows from the US to emerging markets after the anticipated Fed rate reduction next week, which could power the markets higher, according to two analysts.

A rate cut in the US could boost growth and lead to a rise in discretionary spending, helping information technology and pharmaceutical companies, which earn a significant share of their revenue from the country.

Both foreign and domestic institutional investors were net buyers on Wednesday, purchasing Indian shares worth ₹17.55 billion ($209 million) and ₹2.31 billion, respectively.

Investors now await India’s consumer inflation data, due post market hours on Thursday.

Consumer inflation probably held below the Reserve Bank of India’s 4 per cent medium-term target for a second straight month in August, helped by a moderation in food price rises, a Reuters poll of economists showed.

Stocks to watch

** NBCC announces deal with Mahanagar Telephone Nigam for a project worth ₹16 billion.

** Tata Steel signs 500 million pounds grant funding agreement with UK government.

** State Bank of India signs shareholder agreement with Bank Keb Hana Indonesia and Bank SBI Indonesia.

($1 = 83.9830 Indian rupees)