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 Indian shares are set to extend gains on Tuesday after rising for three sessions in a row, following the U.S. Federal Reserve's rate pause and improving rate outlook.

India's GIFT Nifty was down 0.08% at 19,462.50 as of 7:57 a.m. IST, over 50 points above the benchmark Nifty 50's Monday close of 19,411.75.

Wall Street equities rose overnight, with recent jobs and productivity data heightening hops that the Fed will not hike rates any further.

Asian markets declined, ahead of trade data from China and rate decision by the Reserve Bank of Australia. [MKTS/GLOB]

Since the Fed's rate pause on Nov. 1, the blue-chips Nifty 50 and Sensex have risen over 2% each in three sessions.

"We expect the market to remain positive, ahead of Diwali festival over the weekend," said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.

Meanwhile Fitch Ratings raised India's medium-term potential GDP growth estimates by 70 basis points from 5.5% to 6.2%, the highest among emerging market (EM) peers.

Separately, Morgan Stanley also said on Monday that the strong run in Indian equities can continue further due to better growth prospects, relative to other emerging market (EM) peers.

Foreign institutional investors, however, remained net sellers on Monday, extending their selling streak to the ninth session and offloading 5.49 billion rupees ($65.98 million)of shares on a net basis. Domestic institutional investors bought shares worth 5.96 billion rupees.

STOCKS TO WATCH:

** FSN E-Commerce: Company posts slowest revenue growth since listing in November 2021, amid stiff competition.

** Gland Pharma: Drug maker misses second quarter profit view on higher expenses.

** Hindustan Petroleum Corp: State-owned refiner tops profit estimates in September quarter, aided by strong marketing margins.

** Emami: Consumer company posts slide in net profit in second quarter, approves first interim dividend of 4 rupees per share.