The US Federal Reserve’s latest decision to cut interest rates by 25 basis points has sent a fresh wave of optimism through global markets. Early signs suggest Indian equities could open on a stronger note, as investor sentiment across Asia brightens following the Fed’s move.
Market Performance: Early Signals Point to a Positive Start
It was a calm yet confident morning for Indian markets. As per early trends, Gift Nifty futures traded at 26,188 points around 7:45 am, indicating that the Nifty 50 may open above Wednesday’s close of 26,053.9.
Both Sensex and Nifty had already gained about 0.5% each in the previous session, with benchmark indices now sitting less than 1% below their all-time highs recorded in September 2024.
Momentum, it seems, is quietly building again.
The Fed’s 25 bps Rate Cut: What It Really Means?
The Federal Reserve announced a 25 basis point cut in its benchmark interest rate — a move largely anticipated by the markets. But what caught investors’ attention was Chair Jerome Powell’s tone during the announcement.
Powell made it clear that this may not necessarily mark the beginning of a rate-cut cycle.
“Future moves will depend on economic data and conditions,” he emphasized.
That line struck a chord. While the rate cut was welcome, Powell’s cautious stance kept markets realistic — this isn’t an open invitation to expect more easing soon. The decision, however, came at a time when the US economy is navigating a government shutdown that has limited the release of key economic data, adding another layer of uncertainty to the central bank’s future decisions.
Asian Market Mood: Mild Gains Reflect Global Relief
Across Asia, equity indices ticked higher in early trade on Thursday, mirroring Wall Street’s upbeat tone. The quarter-point cut wasn’t a surprise, but the confirmation brought relief.
Still, Powell’s comment that this could be the final rate cut of 2025 tempered expectations of another policy shift in December.
It was a reminder that while monetary policy may be easing, the road ahead remains data-driven and cautious.
Impact on Indian Markets: Global Liquidity Boost on the Horizon
A lower US interest rate typically enhances the appeal of emerging markets like India.
Here’s why:
- It can trigger foreign capital inflows seeking higher returns.
- A softer dollar makes risk assets such as equities and bonds in India more attractive.
- It provides room for central banks like the RBI to consider their own policy calibrations without external pressure.
So, while Powell’s statement curbed runaway optimism, the broader takeaway for Dalal Street remains positive — liquidity is back in play, and global risk appetite is improving.
All Eyes on Trump–Xi Meeting: A Possible Trade Turnaround
Adding to the global buzz, investors are also watching the meeting between US President Donald Trump and Chinese President Xi Jinping scheduled later today.
This high-stakes discussion could shape trade relations between the world’s two biggest economies.
A positive outcome could spark renewed demand for commodities like metals and crude oil — sectors that often benefit from improved trade sentiment.
For India, a favorable trade tone between the US and China generally translates into a more stable global market backdrop — something foreign investors love.
Foreign and Domestic Investor Activity
Wednesday’s data tells a mixed story on capital flows:
- Foreign Portfolio Investors (FPIs) were net sellers, pulling out ₹25.4 billion (around $289 million) from Indian equities.
- Domestic Institutional Investors (DIIs), however, stepped in as net buyers, purchasing shares worth ₹56.93 billion.
This tug-of-war between FPIs and DIIs has kept the market balanced in recent sessions. But with global cues turning supportive, DIIs’ buying momentum may help maintain market resilience in the near term.
Company in Focus: Larsen & Toubro’s Strong Quarter
Among individual stocks, Larsen & Toubro (L&T) could attract attention.
The company recently reported a strong second-quarter performance, backed by robust order inflows and an optimistic outlook for the year.
That tone of confidence from one of India’s largest infrastructure firms could help steady investor sentiment further, especially when broader global cues are aligning positively.
Summary: Sentiment Turns Upbeat, But Caution Prevails
To sum it up, here’s the snapshot of the current setup:
- US Fed cuts rates by 25 bps, aligning with market expectations.
- Powell cautions that future moves depend on data — not an automatic easing cycle.
- Gift Nifty indicates a higher opening, hinting at positive momentum.
- FPIs remain sellers, but DIIs balance the flow with strong domestic buying.
- Asian markets trade higher, reflecting global relief after the Fed move.
- Trump–Xi meeting could further shape the day’s risk sentiment.
For now, optimism is back on the table — but the tone is measured.
The market’s next steps will depend less on emotions and more on clarity — both from Washington and global trade developments.
