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Indian shares are set for a muted start on Friday, as optimism over moderating U.S. inflation offset near-term domestic price concerns.

India's GIFT Nifty on the NSE International Exchange was up 0.05% at 19,550 at 8:15 a.m. IST.

Wall Street equities edged higher overnight after data showed that U.S. consumer price inflation moderated in July, bolstering hopes that the U.S. Federal Reserve is near the end of its rate-hiking cycle. Asian markets were subdued. [MKTS/GLOB]

On Thursday, the Reserve Bank of India held key rates steady as expected. Governor Shaktikanta Das said there could be substantial rise in headline inflation in the near-term and raised retail inflation forecast for fiscal 2024, citing pressure from food prices.

In the ongoing July-September quarter, it now sees inflation at 6.2%, significantly higher than the 5.2% earlier forecast.

The RBI also asked banks to set aside a larger part of incremental deposits under the cash reserve ratio (CRR), to mop-up excess liquidity.

Both the Nifty and Sensex declined on Thursday, dragged by financials and consumer stocks. The bluechips have been little changed for the week, after logging losses in the previous two weeks.

Foreign institutional investors (FIIs) bought Indian equities for the second straight session on Thursday, adding 3.31 billion rupees ($39.98 million) of shares, while domestic institutional investors (DIIs) bought 7.04 billion rupees of equities, according to provisional data from the National Stock Exchange (NSE).

STOCKS TO WATCH:

** Hero MotoCorp: Two-wheeler maker posts rise in June quarter profit, eyes more premium bike launches.

** Life Insurance Corporation of India: State-owned life insurer reports surge in first-quarter profit on transfer of money to a shareholders' fund.

** Apollo Tyres: Tyre maker's June quarter profit more than doubles on lower costs.

** Steel Authority of India: Steel maker posts fall in first-quarter profit on rising costs.

($1 = 82.7830 Indian rupees)