US Fed Cuts Interest Rate by 25 bps: What It Means for Sensex and Nifty Today
The US Federal Reserve cuts rates by 25 basis points, boosting global sentiment. Gift Nifty hints at a higher market open; experts expect RBI to follow with a repo rate cut in December.
US Fed Rate Cut by 25 bps: Impact on Sensex, Nifty and RBI Policy Outlook
Indian stock markets are likely to start the day on an upbeat note on being buoyed by a 25 basis point rate cut by the US Federal Reserve, which has triggered a positive sentiment among global investors. Optimism about the impending Trump–Xi meet and its potential around world trade is also adding to the upbeat mood.
📈 Market Outlook: Nifty, Sensex Likely to Open Higher
Early indicators suggested that Gift Nifty futures were trading at 26,188 points at 7:45 am, hinting that Nifty 50 may open above Wednesday's close of 26,053.9. Well, both the benchmark indices, Sensex and Nifty, gained nearly half a per cent in the previous session and are now trading less than 1 per cent below their all-time highs of September 2024.
Other Asian stock markets opened in limited gains in response to the Fed's move, albeit investors remain on caution following Chair Powell's statement that further rate cuts this year are not guaranteed. He added that the consideration of future monetary policies would be reliant upon upcoming economic data and market conditions.
💵 What the US Fed Rate Cut Means
The US Federal Reserve’s decision to lower interest rates by 0.25% was widely anticipated. While the move aims to support economic growth amid global uncertainty, Powell clarified that this may be the final rate cut of 2025, tempering hopes of further easing in December.
A lower US interest rate often benefits emerging markets like India, as it encourages foreign capital inflows in search of higher yields. This could strengthen market sentiment and boost liquidity on Dalal Street.
🏦 RBI May Follow With a Rate Cut
According to Vishal Goenka, Co-Founder of IndiaBonds.com, the US Fed’s move could prompt the Reserve Bank of India (RBI) to cut the repo rate in its upcoming December policy meeting.
“The Fed’s decision is a green light for the RBI to follow suit. The previous monetary policy was a dovish pause, and this development increases the likelihood of a rate cut,” Goenka said.
He added that a reduction in India’s repo rate could flatten the yield curve, making long-term government bonds more attractive and aiding credit transmission across the banking sector.
🌏 Global Cues: All Eyes on Trump–Xi Meeting
Investors are also tracking the highly anticipated meeting between US President Donald Trump and Chinese President Xi Jinping, expected later today. The two leaders are likely to finalize a trade agreement, potentially boosting demand for key commodities like crude oil and metals — a positive signal for Asian markets.
📊 FPI Activity and Stocks to Watch
On Wednesday, foreign portfolio investors (FPIs) offloaded Indian equities worth ₹2,540 crore (about $289 million), while domestic institutional investors (DIIs) bought shares worth ₹5,693 crore, offsetting the outflows.
Among individual stocks, Larsen & Toubro (L&T) is likely to stay in focus after the company posted robust Q2 earnings and revised its order growth outlook upward for the fiscal year.
🔍 Market Summary
Fed cuts rates by 25 bps; signals possible end to 2025 easing cycle
Gift Nifty at 26,188, indicates positive market opening
Sensex, Nifty likely to trade near record highs
RBI rate cut now seen as more probable in December
FPIs net sellers, DIIs net buyers in Wednesday’s trade
