Indian shares seen opening flat after Fed signals more hikes; NSE IPO in focus
Indian shares are set for a muted start on Thursday after the U.S. Federal Reserve raised interest rates and signalled further hikes, while elevated crude prices and a busy primary market led by the National Stock Exchange of India's IPO opening are expected to weigh on sentiment.
GIFT Nifty futures were trading around 23,224.5 points, as of 7:58 a.m. IST, indicating a flat start for the Nifty 50 index, which closed at 23,217.60 on Wednesday.
The Fed raised rates by 25 basis points in a unanimous decision, its first increase in more than three years. Updated quarterly projections showed that 16 of 18 policymakers expected at least one additional 25-basis-point increase by year-end.
Higher U.S. interest rates reduce the appeal of emerging markets such as India for global investors. They may also pressure sectors including information technology, where companies derive a significant portion of revenue from the United States.
Brent crude eased slightly to about $106 a barrel after reports that Saudi Arabia had offered additional cargoes through Oman, easing some concerns over supply disruptions.
However, restrictions around the Strait of Hormuz and persistent geopolitical risks continue to cloud the oil market outlook. [O/R]
Investors will also watch the NSE IPO, which opens on Thursday and becomes the fifth active offering in the primary market.
The exchange allocated shares worth 67.46 billion rupees ($703.07 million) to anchor investors on Wednesday, including Norway's and Abu Dhabi's sovereign wealth funds, at 1,785 rupees apiece, the upper end of the IPO price band.
"With the IPO pipeline so crowded, a substantial amount of liquidity is likely to be absorbed by the primary market," said Arun Kejriwal, founder of Kejriwal Research and Investment Services.
"Investor attention is overwhelmingly focused on new issues, leaving the secondary cash market relatively neglected."
STOCKS TO WATCH
** Domestic oil refiners, marketing firms and upstream exploration companies will be in focus after the government lowered the windfall tax on export of petrol, diesel and aviation fuel
** Asset Reconstruction Company shares will list in the session, after its 7.33 billion rupees initial public offering was subscribed over 20 times last week
** U.S. drug regulator issues establishment inspection report to Alembic Pharma's Vadodara bioequivalence facility
($1 = 95.9500 Indian rupees)
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