INDIA STOCKS-Indian benchmarks tepid as traders gauge geopolitical tensions, Fed comments

By Vivek Kumar M and Bharath Rajeswaran

May 8 (Reuters) - Indian benchmark indexes were subdued on Thursday, as investors weighed geopolitical tensions with Pakistan, persistent concerns over inflation and unemployment risks in the United States.

The Nifty 50 .NSEI was flat at 24,411.5 and the BSE Sensex .BSESN was tepid at 80,776.75, as of 10:26 a.m. IST.

"The major overhang of a significant escalation seems to be in the backburner, as of now. That has also led to a drop in the volatility index," said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.

The volatility index .NIFVIX, often called the fear gauge, eased after climbing in nine of the past 10 sessions, following a deadly attack last month by Islamist militants on Hindu tourists in Indian Kashmir that left 26 dead.

Seven of the 13 major indexes recorded gains. The broader small-caps .NIFSMCP100 and mid-caps .NIFMDCP100 rose 1.2% and 0.5%, respectively.

India hit Pakistan and Pakistani Kashmir with missiles on Wednesday, and Pakistan vowed to retaliate saying it shot down five Indian aircraft, in the worst clash in more than two decades between the nuclear-armed neighbours.

While tensions prompted investor caution, foreign portfolio investors (FPIs) continued to buy, pointing to hopes of a U.S. trade deal and India's economic resilience as key positives.

FPIs have purchased Indian shares worth 450.55 billion rupees ($5.3 billion) in the past 15 sessions, recording their longest buying streak in two years.

Overnight, in a widely expected decision, the U.S. central bank kept rates unchanged, but said the risks of higher inflation and unemployment had risen. Chair Jerome Powell's comments further clouded the U.S. economic outlook as its policymakers grapple with the potential impact of President Donald Trump's tariffs.

Shares of India's Tata Motors TAMO.NS, which makes the luxury Jaguar Land Rover cars in Britain, advanced 2.5% on Thursday following reports that the U.S. and the UK could likely announce a trade deal later in the day.