Indian shares are set to open higher on Friday, ahead of the Reserve Bank of India's (RBI) monetary policy decision, where the bank is expected to stand pat on key rates for a fifth consecutive meeting.
India's GIFT Nifty was trading down 0.04% from its overnight close at 21,073 as of 7:57 a.m. IST, indicating that the Nifty 50 will open higher than Thursday's close of 20,901.15.
The RBI's rate decision will be announced at 10:00 a.m. IST.
A Reuters poll of 64 economists in early December showed that the RBI would keep its key repo rate unchanged at 6.50% on Friday.
"We expect the RBI to remain on cautious hold," said Rahul Bajoria, managing director and head of emerging markets (EM) Asia (ex-China) Economics at Barclays.
The pause in rate hikes so far this fiscal year, after an increase of 250 basis points in fiscal 2023, has helped the benchmark Nifty 50 jump 20.40% since the end of March and hit all-time highs.
"We remain positive on Indian markets, supported by a favourable domestic backdrop (economic growth, earnings), helped by an improvement in external factors like U.S. Treasury yields and crude prices," said analysts at HSBC Global Research.
The Nifty 50 is on course to extend gains for sixth week in a row, longest weekly winning streak since December 2020.
Wall Street equities closed higher overnight, after weekly jobless claims data indicated cooling of the U.S. labour market, aiding expectations of a Federal Reserve rate cut by March 2024. Asian markets opened higher.
Foreign institutional investors (FIIs) sold Indian shares worth ₹1,564 crore on a net basis on Thursday while domestic institutional investors (DIIs) offloaded shares worth 96.6 million rupees, according to provisional data from the National Stock Exchange.