Indian shares point to cautious open after US Federal Reserve leaves rates unchanged

Indian shares are set for a muted opening as the US Federal Reserve kept interest rates steady in a target range between 3.75 and 4.00% on Wednesday. GIFT Nifty futures traded at 22,708 ahead of the bell, following the Nifty 50's previous close at 22,698.85. The 12-member Federal Open Market Committee voted 10-2 to hold rates, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a 0.25-percentage-point hike. The central bank cited a need for more inflation data and aims for its long-term two percent target, while noting that US economic activity is expanding at a strong pace.

Market Impact And Corporate Earnings

Elevated Brent crude futures near $115 per barrel weighed on investor sentiment, as ongoing Middle East conflict risks heighten inflation and currency concerns. Indian equity benchmarks have fallen in six of the last seven sessions due to these oil price pressures. Meanwhile, foreign portfolio investors bought 8.72 billion rupees worth of Indian shares on Wednesday following continuous selling that reached $3.74 billion in October. In corporate news, Hero MotoCorp reported a second-quarter profit miss as rising costs offset demand, while Vedanta's net profit more than doubled on higher volumes and firm base metal prices. United Spirits posted a two percent profit drop due to weak lower-priced brand sales, Meesho narrowed its loss through higher ad income, and PNB Housing Finance recorded a six percent profit rise.

Context

Global monetary policy decisions by the US Federal Reserve heavily influence foreign investor flows into emerging markets like India. Higher interest rates in the US typically strengthen the dollar and increase the appeal of Treasury bonds, prompting foreign portfolio investors to pull back from domestic equities.