Indian shares set to open higher despite oil and rupee pressure

Indian equities are poised to open higher on Wednesday. GIFT Nifty traded up 31 points, or 0.13%, at 24,045.50, signaling a firm start for Dalal Street.

The upbeat tone mirrors a broader rally across Asian markets. US inflation came in cooler than expected, dampening expectations for Federal Reserve rate hikes and boosting risk appetite. Solid earnings from major US banks and renewed momentum in artificial intelligence stocks pushed the S&P 500 and Nasdaq higher on Tuesday.

Regional benchmarks followed suit, with Japan’s Topix rising 0.6% and the Nikkei 225 futures gaining 0.7%. Australia’s S&P/ASX 200 added 0.5%, while Hang Seng futures rose 0.2%. S&P 500 futures were largely flat, and Euro Stoxx 50 futures dipped 0.2%.

However, underlying volatility in India is creeping up. India VIX, a gauge of market fear, settled 3.6% higher at 13.75. Technical analysts note that while the near-term outlook stays positive above 23,950, a decisive break below that level could trigger a period of consolidation. The index faces resistance near the 24,250 to 24,300 zone.

Geopolitical risks are providing a strong counterweight to the positive macroeconomic data. Oil prices climbed after President Donald Trump reimposed a naval blockade on all Iranian ports and Iran launched retaliatory strikes on US infrastructure in the region.

The escalation in the Middle East is already pressuring the Indian rupee. The currency slumped to its weakest level in over a month on Tuesday. Losses were likely contained by central bank intervention, but higher oil prices pose a sustained risk to India's current account and inflation outlook.

For investors, the session highlights a tension between global risk-on signals and localized supply shocks. While US bank earnings and inflation data justify higher equity valuations, the sharp rise in energy costs and currency depreciation demand caution in Indian markets.