Indian stocks set for flat start as oil prices and Fed decision dominate sentiment

Market Outlook

Indian shares are expected to open little changed on Monday as investors stay cautious over high crude oil prices and their impact on inflation. The GIFT Nifty futures were at 22,608 at 7:46 a.m. IST, pointing to a muted start after the benchmark Nifty 50 closed at 22,600 on Friday. The Nifty 50 and BSE Sensex fell 2.4% and 2.2% respectively last week, slipping in all four sessions on surging oil prices and tension in West Asia. Brent crude futures traded around $115 a barrel, easing from a near six‑month high of $117 after Friday’s market close, while attacks on Saudi Arabia kept supply worries alive. MSCI’s broadest index of Asia‑Pacific shares outside Japan eased 0.3%. Economists surveyed by Reuters expect the U.S. Federal Reserve to skip a rate hike this week and hold off until December, signalling patience despite lingering inflation pressures. Higher U.S. rates make emerging‑market equities like India less attractive as the dollar and Treasuries gain favour. Foreign investors bought Indian shares worth 8.9 billion rupees (about $93.74 million) on Friday and were net buyers in three of the last five sessions.

Corporate News

Infosys trimmed its annual revenue‑growth forecast as weakness in its key North American market deepened, highlighting how AI is reshaping the IT services sector. Kotak Mahindra Bank posted a higher‑than‑expected quarterly profit, driven by strong loan demand and lower provisions for bad loans. Dr Reddy’s Laboratories also reported better‑than‑expected quarterly profit, with domestic demand cushioning a slowdown in its crucial U.S. market.

Context

Oil price spikes and geopolitical tensions often pressure emerging markets by raising import bills and stoking inflation. The Fed’s pause on rate hikes can temporarily ease dollar strength, but higher global rates still weigh on capital inflows to markets like India.