The US Federal Reserve has implemented its second consecutive interest rate cut, reducing the benchmark rate by 25 basis points, while refraining from committing to further easing. The move, aimed at supporting economic growth amid moderating inflation and global uncertainties, has sparked mixed reactions across global markets.
For Indian equities, the development brings short-term relief as global liquidity conditions are likely to improve, supporting foreign portfolio inflows. A stable or softer US dollar could also favour the rupee and reduce imported inflationary pressures, particularly in sectors dependent on crude and commodities.
However, the Fed’s cautious tone signals a data-dependent approach, meaning further cuts will depend on inflation trends and economic resilience in the US. This uncertainty may limit sustained risk-on sentiment, keeping Indian markets volatile in the near term.
Analysts believe that while India’s strong macro fundamentals—including robust GDP growth, stable inflation, and resilient domestic demand—remain intact, global cues will continue to drive near-term movements. Investors are advised to focus on sectors with high domestic exposure, such as banking, infrastructure, and FMCG, which are less sensitive to global monetary swings.
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