Indian shares seen flat as Fed holds rates and Brent near $115

what happened

Indian shares are expected to open little changed on Thursday, Reuters reported, after the US Federal Reserve left interest rates unchanged. GIFT Nifty futures stood at 22,708 at 7:35 a.m. IST, while the benchmark Nifty 50 closed Wednesday at 22,698.85.

The Fed held rates steady as expected and chose to postpone any change in borrowing costs until after next week's US midterm elections. It said it is waiting for more data on inflation, which it described as still elevated. Higher US rates make Treasuries and the dollar more attractive, which tends to reduce foreign investor appetite for emerging markets such as India.

Foreign portfolio investors bought Indian shares worth 8.72 billion rupees ($91.58 million) on Wednesday, their second straight session of buying. Even so, they have sold $3.74 billion of shares so far in October. Brent crude hovered near $115 a barrel as traders weighed Middle East conflict risks to energy supplies.

why it matters

Indian benchmarks have fallen in six of the last seven sessions as high oil prices raise concerns about inflation, interest rates and the rupee. Investors now watch how long crude stays expensive and whether the Fed will need to keep policy tight for longer.

market impact

Indian stocks: expensive oil and tighter US rates weigh on the market and pressure the rupee

• ▼Nifty 50 pressure down — high oil prices raise inflation and interest rate risks for India
• ▼Indian rupee pressure down — higher US rates strengthen the dollar and pull capital from emerging markets

tags

instruments