Sensex, Nifty Set To Follow Asian Peers Higher Amid Ukraine Peace Talks

(RTTNews) - Indian shares may open a tad higher on Thursday as a bond sell-off paused and U.S. President Donald Trump said the U.S. and Russia will immediately begin negotiations toward ending the Ukraine conflict.

Closer home, signs of a slowing economy towards the end of 2024 and falling inflation reinforced the views that the Reserve Bank of India (RBI) will continue to loosen its monetary policy in coming months.

Economists expect another 75 basis points of reduction over the rest of this year, bringing the repo rate down to 5.50 percent following last week's 25-bps rate cut for the first time in nearly five years.

India's industrial production rose 3.2 percent year-over-year in December, slower than the revised 5.0 percent gain in November, official data showed. The expected increase was 3.9 percent.

The slowdown in overall growth in December was mainly due to the developments in the manufacturing segment, where the expansion moderated to 3.0 percent from 5.5 percent.

Separate data revealed that India's consumer price inflation slowed more than expected to a five-month low of 4.31 percent in January.

This was the lowest rate since August 2024, when inflation was 3.65 percent. The expected rate was 4.60 percent after a 5.22 percent rise in December.

Benchmark indexes Sensex and Nifty ended marginally lower on Wednesday to extend losses for a sixth straight session amid heightened global uncertainty and potential trade war fears.

The rupee fell by 8 paise to close at 86.87 against the dollar, failing to sustain its early recovery due to sustained foreign fund outflows.

Asian markets were broadly higher this morning, with Japan, Hong Kong and South Korean markets leading regional gains.

The yen was on the back foot while the euro was buoyed by Ukraine peace talks. Gold traded near record highs above $2,900 per ounce while oil prices declined amid expectations that a potential Ukraine peace deal could end sanctions affecting supply flows.

U.S. stocks ended mixed overnight, the dollar advanced and bond yields soared after data showed consumer prices increased in January by the most in nearly a year and a half, adding to worries that the Fed would not rush to resume cutting rates.

The annual rate of consumer price growth accelerated to 3.0 percent in January from 2.9 percent in December, while economists had expected the pace of growth to remain unchanged.

The month-on-month rise for the month was also ahead of expectations, while core inflation touched a 10-month high.

Markets pared early losses after reports emerged that President Donald Trump is considering exemptions to the reciprocal tariffs he may announce as early as Thursday.

Meanwhile, speaking before the House Financial Services Committee on the second day of his semi-annual congressional testimony, Fed Chair Powell reassured lawmakers that the Fed remains committed to making independent decisions based on economic conditions.

The tech-heavy Nasdaq Composite finished marginally higher after tumbling by 1.2 percent earlier. The Dow and the S&P 500 dipped half a percent and 0.3 percent, respectively.

European stocks shrugged of U.S. tariff threats and inflation concerns to close at a record high on Wednesday.

The pan-European STOXX 600 edged up 0.1 percent. The German DAX gained half a percent, France's CAC 40 inched up 0.2 percent and the U.K.'s FTSE 100 added 0.3 percent.