The Indian shares rally is expected to pause on Thursday, with benchmark indexes poised to consolidate after a sharp advance driven by sustained foreign portfolio inflows, lower crude oil prices and a cooling global artificial intelligence trade. GIFT Nifty futures stood at 25,270 at 8:00 a.m. IST, according to Reuters, pointing to a muted opening for the Nifty 50, which closed at 25,255.05 on Wednesday, its highest finish in more than eight months.
What Is Behind the Indian Shares Rally
The main force behind the advance has been overseas money. Foreign portfolio investors bought Indian shares worth 125.63 billion rupees, or about $1.34 billion, on Wednesday, according to provisional data. They have bought a net $6.43 billion of equities in November, which is already their largest monthly purchase since September 2024.
That buying has translated into steep index gains. The Nifty 50 and the Sensex have risen 9.6 percent and 10 percent respectively so far this month. The move marks a reversal for Indian equities, which had lagged their emerging-market peers over the previous two years because of elevated oil prices and limited exposure to the global rally in artificial intelligence stocks.
Lower Crude Oil Prices Offer Support
Cheaper energy has been an important part of the story, since India imports most of its oil and is sensitive to fuel costs. Brent crude futures fell more than 1 percent to $91.8 per barrel on Thursday, as hopes grew for progress in peace talks over conflicts in the Middle East and between Russia and Ukraine. Lower crude oil prices ease pressure on India’s import bill, its inflation outlook and its currency, which tends to support equity valuations.
The rupee itself has benefited from the same inflows. Business Recorder reported on Wednesday that the Indian currency closed at 93.69 per dollar, its strongest level since April, as foreign buying of local stocks offset the strength of a firm US dollar.
Why Analysts Expect a Pause
Despite the supportive backdrop, market participants see limited room for an immediate extension of the gains. Hariselvan Radhakrishnan, founder and chief executive of HST Wealth, said lower crude oil prices continue to provide a favourable setting. He added, however, that the US 10-year Treasury yield, which is hovering near 4.99 percent, and the market’s already extended rally may restrict near-term upside.
Higher US yields matter because they make dollar assets more attractive relative to emerging-market equities, which can slow foreign portfolio inflows. Expectations of tighter US monetary policy add to that concern. According to the CME FedWatch tool, traders are fully pricing in a 25-basis-point Federal Reserve rate hike in December, with a slim chance assigned to a larger increase.
Regional markets offered little direction on Thursday. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.1 percent, weighed down by shares in Hong Kong.
Stocks and Data to Watch
Several individual stocks will be in focus after index provider MSCI announced changes to its India index. Adani Green Energy, Coforge, Life Insurance Corporation of India and Meesho were added to the index, while PI Industries was removed. Such inclusions often attract passive fund flows, which can influence trading in the affected shares.
Investors will also watch India’s October inflation data, which is due for release on Thursday. According to the median forecast in a Reuters poll of 36 economists, annual consumer inflation probably rose to 5.93 percent in October from 5.54 percent in September. A higher reading could temper expectations for easier monetary policy, although its effect on markets will depend on how it is weighed against the continued pace of foreign buying.
Outlook for the Indian Shares Rally
For now, the Indian shares rally rests on a combination of strong foreign portfolio inflows and softer oil prices, both of which can change quickly. A pause after a gain of about 10 percent in less than two weeks would not be unusual, as investors typically take profits and wait for fresh catalysts. Whether the Nifty 50 can build on its recent highs will depend largely on whether overseas investors keep buying, and on the direction of US yields and crude oil prices in the coming sessions.
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