Indian shares set to inch higher as oil eases; IPO rush to cap upside

Indian shares are expected to open slightly higher on Friday, as a decline in crude oil prices provides support, though geopolitical risks in the Middle East and strong demand for domestic initial public offerings (IPOs) could limit gains. Tata group stocks, including those of the Tata Sons, will be closely watched after N. Chandrasekaran was reappointed as chairman and the company expressed interest in a potential public listing.

Additionally, the Shapoorji Pallonji Group has proposed selling a portion of its stake. As of 8:30 a.m. IST, GIFT Nifty futures were trading around 23,329.5 points, suggesting a favorable start for the benchmark Nifty 50 index, which closed at 23,270.60 on Thursday. However, Brent crude prices have fallen by 0.8% to $104 a barrel, due to the belief that alternative routes could maintain the flow of Middle Eastern barrels to global markets, outweighing worries over potential disruptions from renewed strikes involving Saudi Arabia and Houthi forces in Yemen.

Despite the lower Brent prices, they remain above $100 a barrel, raising concerns about inflation in major oil-consuming countries like India. The higher energy costs could negatively impact corporate margins, exacerbate the current-account deficit, and complicate the Reserve Bank of India's efforts to manage inflation. There are currently five Indian IPOs open for subscription, with the National Stock Exchange of India's offering already subscribed 0.43 times on the first day of bidding.

Traders warn that the influx of new offerings may divert liquidity from secondary-market stocks, potentially dampening broader market gains. The Nifty and Sensex have both declined by 0.5% and 0.6% respectively this week, on track for a sixth consecutive weekly decline. Furthermore, foreign institutional investors have been net sellers for seven consecutive days, with outflows totaling 32.09 billion rupees on Thursday.

Domestic investors, however, offset the selling pressure by investing 36.18 billion rupees in shares, based on provisional NSE data.