Indian shares likely to open flat as oil surge counters strong foreign inflows

Indian equities are poised to open flat on Friday, as foreign institutional investments provide a buffer against the impact of surging oil prices and mounting domestic inflation. The Nifty futures stood at 25,267.5 as of 7:13 a.m. IST, forecasting a subdued opening for the Nifty 50, which closed at 25,299.35 on Thursday. Foreign investors maintained their relentless buying trend, accumulating a net 78.31 billion ($832.71 million) of Indian stocks on Thursday, marking their ninth consecutive day of purchasing.

In just November, inflows have surpassed $8 billion, representing the highest monthly figure since December 2020. The Nifty 50 and Sensex have rallied 1.1% this week, foreshadowing a third successive weekly surge. This positive momentum signals a resurgence for India's equity market, which has lagged behind emerging markets for nearly two years.

Although the recent rally offers hope, elevated oil prices and India's comparatively lower exposure to the AI sector have hindered market performance over the past two years. The recent revival in global interest in AI stocks has softened, however, as concerns mount over potential regulatory scrutiny of data-center investments following the Democratic victory in the US mid-term elections.

Coupled with domestic worries, India's retail inflation surged to 6.09% in October, surpassing the Reserve Bank of India's permissible upper limit of 6%. Escalating food prices have strained household finances and fueled apprehensions of further interest rate hikes. Brent crude futures hovered around $95.23 per barrel, up from $92 during the closing of India's equity market on Thursday, as attacks on Saudi energy infrastructure and shipping disruptions in the Strait of Hormuz threatened global oil supplies.

Stock markets in Asia weathered a turbulent week, punctuated by revelations of extramarital affairs involving Nvidia CEO Jensen Huang, which culminated in his resignation—an unwelcome blow to the global AI boom that he had spearheaded.