Indian Shares Seen Opening Flat as Fed Signals More Rate Hikes

Indian shares are likely to open little changed on Thursday as investors assess the U.S. Federal Reserve’s latest rate decision, higher crude oil prices and a busy primary market. The National Stock Exchange of India’s IPO is also expected to draw attention as it opens for subscription.

GIFT Nifty futures were trading at 23,224.5 points at 7:58 a.m. IST, indicating a flat start for the Nifty 50. The index finished Wednesday at 23,217.60.

Indian Shares Watch Fed Rate Outlook

In a unanimous vote, the United States Federal Reserve boosted interest rates by 25 basis points. The central bank raised interest rates for the first time in over three years.

The Fed’s new quarterly estimates also revealed that 16 of its 18 officials projected at least one further 25-basis-point rate hike by the end of the year. The prognosis may make global investors apprehensive of developing countries like India.

Higher US interest rates may weaken the appeal of developing economies to overseas investors. Indian IT businesses may also under pressure since the majority of their income originates from the United States.

Oil prices remain another aspect influencing Indian stocks. Brent oil fell marginally to roughly $106 per barrel on news that Saudi Arabia has provided more shipments via Oman, alleviating fears about potential supply disruptions.

However, the situation in the Strait of Hormuz and larger geopolitical issues continue to cause volatility in the oil market. Investors will keep an eye out for any new events that may have an impact on petroleum supply.

NSE IPO Draws Investor Attention

The National Stock Exchange of India’s IPO will begin on Thursday, making it the fifth active offering on the main market. The hefty IPO pipeline may syphon a significant amount of money away from the secondary market.

On Wednesday, the market allocated shares worth 67.46 billion rupees ($703.07 million) to anchor investors. The allocation includes sovereign wealth funds from Norway and Abu Dhabi, with shares priced at 1,785 rupees apiece, the high end of the IPO’s price range.

Arun Kejriwal, founder of Kejriwal Research and Investment Services, believes the congested IPO pipeline will consume a significant amount of market liquidity. He also said that investor interest was primarily concentrated on new issuance, with less emphasis on the secondary cash market.

Stocks to Watch

Domestic oil refiners, gasoline marketing organisations, and upstream exploration enterprises will be scrutinised after the government decreased the windfall tax on petrol, diesel, and aviation fuel exports.

Shares of Asset Reconstruction Company will also be listed during the session. Its 7.33 billion-rupee IPO was oversubscribed more than 20 times last week.

Alembic Pharma will also be scrutinised after the US drug agency issued an establishment inspection report for the company’s Vadodara bioequivalence lab.

The most recent rate for the dollar was 95.9500 Indian rupees.

As trading opens on Thursday, investors will most likely be looking at the Fed’s rate forecast, oil prices, and the flow of money into new IPOs.