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India's equity benchmarks are set to open higher on Friday, supported by government tax cuts, a cooling U.S. labour market, and dovish comments from Federal Reserve officials that strengthened expectations of an interest rate cut this month.

Gift Nifty futures were trading at 24,886.5 points as of 08:00 a.m. IST, indicating that the Nifty 50 will open above Thursday's close of 24,734.3.

The Nifty 50 and the BSE Sensex gained about 1.1% each intraday in the last session, led by auto and consumer stocks, after the Goods and Services Tax Council approved a shift to a two-rate structure and cut levies on everyday goods to spur demand.

However, energy stocks lagged as higher taxes on oil-related services weighed, leaving the benchmarks with only marginal advances at close. [.BO]

"The modest closing gains suggest the tax cuts may have been largely priced in, but momentum stays positive given the direct benefits from GST reforms," said Rajesh Bhosale, equity technical analyst at Angel One.

Asian markets opened higher after Wall Street rose overnight, with softer U.S. labour data and Fed officials' dovish commentary fuelling rate-cut hopes.

Money markets are now pricing in a near-100% chance of a rate cut at the Fed's upcoming policy meeting in two weeks.

Lower U.S. rates typically make emerging markets like India more appealing for global investors.

Foreign portfolio investors offloaded Indian shares worth 1.06 billion rupees ($12.04 million) on Thursday, while domestic institutional investors bought stocks worth 22.33 billion rupees.

"With (the) supportive policies and a favourable base reducing the risk of earnings downgrades, conditions are aligning for foreign investors to return," HSBC Global Investment Research said.

STOCKS TO WATCH

** Zydus Lifesciences enters into an exclusive licensing and supply agreement with Synthon for a drug to treat patients with multiple sclerosis for the U.S. market.

** RPP Infra Projects wins orders worth 1.34 billion rupees from Maharashtra State Infrastructure Development Corporation.

** Biocon receives a Form 483 with five observations from the U.S. drug regulator following an inspection at its Bengaluru facility.

($1 = 88.0828 Indian rupee)