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India's equity benchmarks are expected to open higher on Thursday after the U.S. Federal Reserve cut interest rates by a quarter point in a bid to halt any slide in the labour market in the world's largest economy.

Gift Nifty futures were trading at 25,520.5 points as of 08:10 a.m. IST, indicating that the benchmark Nifty 50 will open above the two-month high of 25,330.25 hit on Wednesday.

The Fed on Wednesday lowered rates for the first time this year to address the weakness emerging in the labour market.

However, Fed Chair Jerome Powell tempered the more aggressive easing expectations in markets, saying Wednesday's move was a risk-management cut and that the central bank does not need to move quickly on rates.

Lower U.S. interest rates make emerging markets like India attractive to foreign portfolio investors (FPIs), as Treasury yields and the dollar typically decline in such a scenario.

The prospects of stronger FPI flows, coupled with consistent support from domestic institutional investors, strengthen the case for continued market upside, said Ponmudi R, chief executive officer of Enrich Money.

India's blue-chip 50-stock index has risen in ten of the last eleven sessions, and is 3.6% off its lifetime high hit in September last year.

The gains have been driven by multiple factors, including recent domestic tax cuts, expectations of a U.S. rate cut and improving sentiment around trade negotiations with Washington.

"Fed rate cuts and lower inflation due to GST cuts increase the odds of an RBI rate cut in October 2025," said Deepak Agrawal, chief investment officer - debt at Kotak Mahindra AMC.

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