Indian shares set to open higher; Fed chair speech, closing auction volatility in focus
Indian shares are expected to open higher on Friday after two straight sessions of losses, although caution may persist ahead of a speech by the Federal Reserve chair and after sharp swings during the new closing auction mechanism. GIFT Nifty futures were at 24,262 points, as of 7:56 a.m. IST, indicating a positive start for the Nifty 50, which closed at 24,090.85 on Thursday. The 50-stock index…
Indian shares are poised to open higher on Friday after two consecutive days of declines, though market caution may linger ahead of remarks from Federal Reserve chair Kevin Warsh and following significant fluctuations in the closing auction system. As of 7:56 a.m. IST on Friday, Nifty futures were trading at 24,262 points, suggesting a bullish opening for the Nifty 50, which had closed at 24,090.85 on Thursday.
The 50-stock index experienced a 1% drop over the previous two sessions, bringing it to the brink of a third straight weekly loss. This decline is attributed to the impact of high oil prices and elevated Treasury yields on global risk assets.
Derivatives trading on India's BSE index reached its lowest level in 11 months during Thursday's monthly expiry session, marked by an erratic closing auction. The benchmark Sensex saw its indicative close slip over 3% briefly during the auction, but it later recovered to close 0.7% lower. The volatility in the cash market also led to sharp increases in options premiums for the expiring monthly Sensex contracts.
Meanwhile, Brent crude futures were trading near $89 per barrel on Friday. Iran's ongoing negotiations for reopening the Strait of Hormuz have gained renewed attention, with Tehran agreeing to draft a list of conditions to restore normal shipping after a Qatari representative urged Iran to respect freedom of navigation. US Treasury yields rose slightly on Thursday as investors awaited Warsh's speech at the Federal Reserve's Jackson Hole symposium for additional insights into the central bank's interest rate trajectory.
Elevated yields can increase borrowing costs and potentially deter foreign investment in riskier assets, including emerging market equities.
Foreign investors withdrew a total of 2.98 billion rupees ($31.19 million) in shares from the Indian market on Thursday, according to provisional figures. However, August saw strong foreign inflows, with investors purchasing shares worth $3.15 billion, marking the highest monthly net outflow since September 2024. Year-to-date outflows have been trimmed to $24 billion.
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