Indian shares seen opening higher after selloff; higher oil, Fed caution to cap gains

Indian stocks are anticipated to open on a bullish note on Wednesday, poised for a technical rebound following the Nifty 50's recent five-month low. As of 7:54 a.m. IST, Nifty futures were hovering around 23,218.50 points, suggesting a favorable start for the Nifty 50 index, which had closed at 23,118.60 the previous day. Currently, both indices are in oversold territory, leaving room for a technical bounce from their present levels.

However, the prevailing trend remains bearish, according to Vatsal Bhuva, a technical analyst at LKP Securities. Analysts predict a subdued market environment due to soaring crude prices, heightened primary market activity, and the upcoming US Federal Reserve's rate decision. Three Initial Public Offerings (IPOs), comprising Hero Motors, SS Retail, and Jindal Supreme India, will see subscription commencement on Wednesday, raising the total number of active IPOs to four.

On Tuesday, the benchmarks started roughly 0.8% higher but managed to erase those gains, concluding more than 1% lower each. Bhuva attributes the weakness to crude oil as the primary catalyst, stating, "Crude oil remains the dominant overhang for domestic markets. Even in the previous session, markets failed to sustain the opening gains, succumbing to broad-based selling as elevated oil and firm Treasury yields weighed on investor sentiment."

Brent crude prices were trading around $108.3 a barrel, following a near four-month high on Tuesday, driven by supply concerns stemming from Saudi Arabia’s cessation of oil loading at its Yanbu port and reduced oil shipments to Europe. Other Asian markets were subdued ahead of the Federal Reserve's policy decision, with many investors anticipating a rate hike.

Foreign institutional investors recorded a net outflow of 29.78 billion rupees ($310.37 million) from domestic markets on Tuesday, marking the highest since September 4, while domestic institutional investors were net buyers, with inflows totaling 26.86 billion rupees, as per provisional data from the National Stock Exchange.