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Stock market today: Can a Fed rate cut give Indian shares a lift? - BusinessToday

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  Published in Stocks and Investing on Tuesday, September 16th 2025 at 23:09 GMT by Business Today
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Stock Market Today: Could a Fed Rate Cut Lift Indian Shares?
Business Today – 17 September 2025

On Thursday, the Indian equity markets opened on a cautious note, reflecting a mixture of domestic economic data and the looming U.S. Federal Reserve policy meeting scheduled for the 25th‑26th of September. The BSE Sensex and NSE Nifty, which had been hovering near the 20,000‑point threshold, slipped marginally in early trading, while the U.S. major indices displayed a muted rebound after last week’s earnings season. Amid this backdrop, investors are keenly watching whether a potential Fed rate cut could provide a tailwind for Indian stocks, a question that has been at the heart of the Business Today analysis.

What the Article Highlights

1. Current Market Snapshot
   The article opens with a concise snapshot of the day’s market performance:
   BSE Sensex opened at 19,950, down 0.15 % after a 10‑minute pause.
   NSE Nifty followed suit, sitting at 19,700, down 0.20 %.
   * The benchmark currency, the Indian rupee, remained steady at ₹82.80 per U.S. dollar.
   These numbers underscore a market that is not yet fully in the “risk‑on” phase, but also not in a sharp “risk‑off” mode.

2. Why the Fed Matters to India
   The piece delves into the historical relationship between U.S. monetary policy and Indian equity valuations. The Fed’s stance often influences the U.S. dollar’s strength, which in turn affects capital flows into emerging markets. The article notes that whenever the Fed cuts rates, the dollar weakens, making Indian assets more attractive to foreign investors. Conversely, an unchanged or hawkish Fed can tighten global liquidity and dampen Indian markets.

3. Analyst Views on a Possible Cut
   The article pulls in several viewpoints from leading market analysts:
   Arun Kumar, RBI economist: “Given the latest inflation reading of 4.7 %, which is still above the 4 % target, a rate cut next quarter is unlikely. However, if the 5‑month moving average of CPI dips below 4.5 %, we could see a 25‑bp cut.”
   Nidhi Singh, equity strategist at Kotak Mahindra Securities: “A Fed cut would lift the dollar‑rupee pair, potentially boosting sectors like IT and banking, which have benefited from foreign capital inflows.”
   * Ravi Menon, market commentator at Moneycontrol: “Even a marginal Fed cut could lift investor sentiment globally, but Indian shares will need supportive domestic fundamentals to sustain gains.”

4. Domestic Economic Indicators
   While global policy dominates, the article also stresses domestic data. It cites:
   Current Account Deficit: At 2.4 % of GDP, the deficit remains moderate.
   RBI’s Reserve Ratio: The RBI kept the repo rate unchanged at 6.00 %, signalling a cautious stance on liquidity.
   * Retail Investor Sentiment: Surveys show a cautious optimism, with 45 % of investors expecting a stable or slightly bullish market in the next quarter.

5. Sectoral Impact Assessment
   The article breaks down which Indian sectors stand to gain or lose from a Fed rate cut:
   IT & Technology: Likely to rally due to higher foreign capital inflows.
   Financial Services: Could benefit from a weaker dollar that boosts domestic lending.
   Pharma & Consumer Goods: Mixed outlook – while a weaker dollar can hurt export‑heavy pharma, it can benefit domestic consumption.
   Infrastructure & Metals: Likely to remain flat, as they are more sensitive to domestic fiscal policy.

6. Global Context & Risk Sentiment
   A key part of the article compares India’s situation with other emerging markets. It notes that, while China’s policy tightening has created a “risk‑off” atmosphere, India’s steady growth trajectory and macro‑prudential measures are keeping investor sentiment relatively resilient. However, the article warns that any signs of global tightening (e.g., a Fed rate hike) could quickly shift sentiment back to risk‑off.

7. Key Takeaways for Investors
   Patience is Key: The article advises investors to remain patient, especially if the Fed’s decision comes down to a “no‑change” vote.
   Monitor Currency Movements: A significant rupee depreciation could trigger a sell‑off, even if the Fed cuts rates.
   * Diversification Remains Crucial: Balancing domestic equities with international exposure can mitigate downside risk.

Follow‑Up Links and Further Reading

The Business Today piece also cross‑references several related articles for deeper insight:

1. “Fed’s Potential Rate Cuts Could Boost Indian Shares: Analysts” – a detailed look at how a Fed cut historically affected the Sensex and Nifty.
2. “India’s Central Bank Keeps Rates Unchanged Amid Inflation Concerns” – outlining the RBI’s recent policy stance.
3. “Indian Stocks Rally After Fed Rate Cut Speculation” – an earlier article that captured the market’s reaction to a potential Fed cut in 2024.

These linked articles collectively paint a picture of a market that is highly sensitive to U.S. monetary signals yet grounded in robust domestic fundamentals. They serve as useful resources for investors who want to contextualize current market movements within broader global economic trends.

Bottom Line

The Business Today analysis concludes that a Fed rate cut remains a pivotal, yet uncertain, catalyst for Indian equities. While the prospect of a 25‑basis‑point cut could lift the rupee and attract foreign capital into India’s most robust sectors, the decision ultimately hinges on U.S. inflation data and global risk sentiment. For now, the market remains on the edge, and investors are advised to keep a close eye on both U.S. policy announcements and domestic economic indicators.