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 Indian shares are set to open higher on Wednesday, with benchmarks inching closer to all-time highs on rising odds of an interest rate pause by the U.S. Federal Reserve after inflation eased to a more than two-year low in May.

India's NSE stock futures listed on the Singapore Exchange were up 0.27% at 18,835, as of 7:49 a.m. IST.

Wall Street equities closed higher on Tuesday, with the Nasdaq and S&P 500 hitting fresh one-year highs. The annual increase in the consumer price index in May was the smallest in more than two years, official data showed. The odds of a Fed rate pause rose to 93.7% from 75% ahead of the data. [FEDWATCH]

Asian markets edged higher ahead of the Fed policy decision, due at 11:30 p.m. IST on Wednesday. [MKTS/GLOB]

Indian shares closed higher on Tuesday as cooling domestic inflation aided risk sentiment. Both the Nifty 50 and Sensex closed at fresh six-month highs and are less than 1% below all-time highs.

The midcap index gained over 1.2% to a fresh all-time high. The smallcap index also hit a new 52-week high.

"Lower (domestic) inflation boosted fast moving consumer goods stocks, while the rate pause by the RBI (Reserve Bank of India) last week led to the rally in realty stocks," said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.

Analysts expect markets to consolidate ahead of key central bank decisions from the Bank of Japan and European Central Bank, besides the Fed.

Foreign institutional investors bought 16.78 billion rupees ($204 million) worth of Indian equities on a net basis on Tuesday, while domestic investors sold 2.03 billion rupees of shares, as per provisional NSE data.

STOCKS TO WATCH

** Zee Entertainment: Plutus Wealth Management bought 7.5 million shares (0.78% stake) at 191.44 rupees apiece via open market transactions.

** Anupam Rasayan: Co signs letter of intent worth $265 million with a Japanese specialty chemical firm.

** Zydus Lifesciences: U.S. FDA inspection at the injectables manufacturing facility at Ahmedabad concluded with nil observations.

** Nazara Technologies: Europe-based financial services group Societe Generale offloads 400,000 shares at 681.74 rupees apiece.

($1 = 82.2860 Indian Rupees)