Indian shares set to open higher on rising hopes of a Fed rate pause

BENGALURU (Reuters) - Indian shares are set to open higher on Thursday, with the benchmark Nifty 50 and Sensex hovering around record highs, after U.S. inflation data cemented the likelihood of a pause in the rate hike cycle by the Federal Reserve later this month.

India's GIFT Nifty on the NSE International Exchange was up 0.16% at 20,178 at 7:57 a.m. IST.

Asian equities rose on Thursday on easing rate concerns after U.S. consumer price data showed core inflation moderated to 4.3% in August from 4.7% in July, the smallest year-on-year rise in nearly two years.

However, the overall retail inflation accelerated 3.7% in August, the most in 14 months, on rising gasoline prices. [MKTS/GLOB]

The odds of a Fed rate pause at the upcoming policy meeting on Sept. 20 stood at 97% following the data, compared to 92% on Wednesday.

Both Nifty 50 and Sensex settled higher on Wednesday, led by gains in financials and energy stocks as investors bet on large-cap companies amid heightened volatility in small- and mid-caps after a record run.

The Nifty 50 rose to a fresh record high earlier this week, while the Sensex closed less than 0.5% shy of its all-time high, hit on July 20.

Brent crude futures stayed above $92 per barrel, on supply concerns after Russia and Saudi Arabia extended output cuts to the end of 2023 last week. Rising crude oil prices hurt India, where the commodity accounts for a significant share of the import bill. [O/R]

"Every $10 rise in Brent crude prices could widen India's current account deficit by 0.5% and lead to a rise in inflation," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Foreign institutional investors sold 16.32 billion rupees ($196.86 million) worth of shares on a net basis on Wednesday, while their domestic counterparts bought 8.50 billion rupees worth of shares, exchange data showed.

STOCKS TO WATCH:

** Bombay Dyeing and Mfg: Co to sell a land parcel in Mumbai to a unit of Japan's Sumitomo Realty and Development Co, for 52 billion rupees.

** NBCC: Co secured an order worth 1.80 billion rupees; also signed deal with the Ministry of Steel, Rashtriya Ispat Nigam and National Land Monetization Corp for monetisation fo RINL's non-core assets at Vishakhapatnam.

** Suven Pharmaceuticals: Government approved foreign investment of up to 95.89 billion rupees in the drug maker.

** IRCTC: Co signed a deal with NBCC Services for a tentative cost of 314 million rupees.

($1 = 82.9000 Indian rupees)

(Reporting by Bharath Rajeswaran and Archishma Iyer in Bengaluru; Editing by Janane Venkatraman)