Fed Rate Decision: Indian Markets' Reaction to Cuts or Pause

• The US Federal Reserve's FOMC meeting outcome is expected tonight, with analysts largely anticipating a third consecutive interest rate cut.
• A 25 bps rate cut, the most likely scenario, could lead to an initial relief rally in Indian markets, especially in rate-sensitive sectors, and potentially boost FII inflows if the Fed signals future easing.
• A 50 bps cut, though unlikely, might cause a sharp but volatile rally, signaling deeper economic stress, while a "no cut" scenario would likely trigger a negative, risk-off reaction in markets.
• The Fed's tone and narrative are considered more critical than the cut's size, influencing market sentiment and investor behavior.
• US rate decisions significantly impact Indian stock markets, with rate cuts potentially benefiting sectors like IT due to increased discretionary spending in North America.

Why It Matters: US Fed's rate decision will directly affect your Indian stock investments.