Indian Shares Seen Tad Higher At Open

(RTTNews) - Indian shares look set to open higher on Wednesday as softer U.S. inflation data helped traders to scale back their expectations for Federal Reserve interest rate hikes.

Overall gains, however, may remain limited as oil prices extended gains for a third straight session after the U.S. reinstated its blockade of Iranian ports and President Donald Trump warned of additional strikes on Iran.

U.S. forces will intensify their campaign in the coming days, targeting power plants and bridges if Iran refuses to sign a deal with Washington, Trump was quoted as saying by Fox News.

Benchmark indexes Sensex and Nifty fell around 0.7 percent each on Tuesday as the U.S and Iran escalated a standoff over control of the Strait of Hormuz.

The rupee ended 0.6 percent lower at 96.20 against the dollar, after having touched an intraday low of 96.24, its weakest level since May 22 on concerns that a prolonged disruption to Middle East energy supplies could widen India's import bill, put fresh pressure on the rupee and complicate the outlook for inflation and interest rates.

Foreign institutional investors remained net sellers in Indian equities for a second straight session on Tuesday, offloading shares worth Rs. 739.69 crore, while domestic institutional investors net bought shares to the extent of Rs. 2,927.71 crore, according to provisional exchange data.

Reuters reported that India has attracted roughly $10 billion in inflows through the RBI's special deposit scheme for overseas Indians after the central bank allowed banks to extend loans to NRIs against foreign-currency deposits.

Meanwhile, after U.S. President Donald Trump backed the Sanctioning Russia Act, proposing up to 500 percent tariffs on India and China for importing Russian oil, the Ministry of Petroleum and Natural Gas said that rising imports of Russian crude oil is part of a deliberate strategy to diversify supply sources and safeguard energy security.

On the data front, the Ministry of Commerce and Industry reported that India's wholesale price inflation accelerated unexpectedly in June, climbing 9.87 percent year-on-year compared to an increase of 9.68 percent in May.

According to data released a day earlier, India's consumer price inflation increased to 4.38 percent in June from 3.93 percent in May, driven primarily by food and energy prices.

Asian markets were mostly higher this morning, with South Korea's chipmaker-heavy Kospi surging nearly 7 percent.

China's GDP growth came in at 4.3 percent in Q2, the weakest pace since late 2022 and missing market projections.

However, separate industrial output and retail sales released alongside GDP figures showed some signs of improvement in consumer activity in June.

The U.S. dollar struggled for direction after falling from a two-week high. Gold was subdued at $4,035 an ounce while Brent crude futures rose toward $86 a barrel, after having gained more than 12 percent so far this week amid a flare-up in Middle East fighting.

U.S. stocks rose overnight as softer inflation data and blockbuster bank earnings offset a profit warning from IBM.

Bond yields dipped and the odds of a July rate hike crashed from 40 percent to 20 percent after data showed both headline and core inflation eased in June.

CPI inflation fell to 3.5 percent in June, coming in below estimates for a 3.8 percent jump and down from 4.2 percent in May, dragged down by the biggest decline in gasoline prices since 2022. Core inflation slowed to 2.6 percent from a seven-month high of 2.9 percent in May.

Meanwhile, crude oil prices pulled back from day's highs after President Trump backed away from his threat to charge a 20 percent toll on all cargo going through the Strait of Hormuz.

The President said he would instead chase "trade and investment deals" with Persian Gulf nations after speaking to their leaders.

The tech-heavy Nasdaq Composite surged 0.9 percent, the S&P 500 gained 0.4 percent and the narrower Dow finished marginally higher.

European stocks reversed course to end higher on Tuesday after the release of weaker-than-expected U.S. inflation data. The pan-European STOX 600 inched up 0.2 percent.

France's CAC 40 ended little changed while the German DAX edged up 0.1 percent and the U.K.'s FTSE 100 added 0.3 percent.