Indian equities are likely to open on negative note on Thursday amid mixed global cues. The GIFT Nifty is trading near 23,220, signalling a gap down opening of about 50-60 point.
“While a pullback in Brent crude to around $104.7 a barrel from its recent high offers some marginal relief, the Federal Reserve’s rate hike and indication of further tightening could keep markets volatile and limit any immediate recovery,” said Hariselvan Radhakrishnan, Founder & CEO of HST Wealth.
The Fed raised its policy rate by 25 basis points to 3.75 per cent–4 per cent, its first increase in three years, and projected another hike this year. Wall Street closed lower, while the US 10-year Treasury yield remained near 5 per cent, underscoring concerns that borrowing costs could stay elevated for longer.
“For India, higher US interest rates could strengthen the dollar, pressure the rupee and weigh on foreign investment flows into emerging markets. The latest domestic inflation data, released earlier this week, showed consumer price inflation rising to 4.82 per cent in August from 4.45 per cent in July, adding to concerns over the inflation outlook and the RBI’s policy stance. The combination of elevated domestic inflation and higher global borrowing costs could delay expectations of monetary easing, keeping funding costs elevated and limiting scope for valuation expansion,” he said.
Ponmudi R, CEO of Enrich Money, said Indian markets are likely to remain vulnerable after the US Federal Reserve raised interest rates by 25 basis points, its first hike since 2023, while signaling the possibility of another increase later this year. The hawkish stance, aimed at addressing persistent inflationary pressures—including those linked to elevated oil prices—has pushed U.S. Treasury yields higher and strengthened the dollar, with the Dollar Index trading around 100.35. In India, the 10-year government bond yield remains elevated near 7.09%, reflecting pressure from higher global yields, elevated crude oil prices and continued weakness in the rupee.
Asian markets are trading on a mixed note in early trade, with the Nikkei 225 gaining around 0.40% while South Korea’s KOSPI remains largely flat.
Nachiketa Sawrikar, Fund Manager at Artha Bharat Global Multiplier Fund prespective on US Fed meeting, said the Federal Reserve’s decision to raise interest rates by 25 basis points was largely anticipated by financial markets. With inflation well above the Fed’s 2% target, economic growth resilient and the labor market relatively stable, we believe the Fed needed to demonstrate its commitment to restoring price stability.
“As we have argued previously, sometimes raising short-term interest rates is precisely what is needed to bring long-term interest rates down. A credible commitment from the Federal Reserve to control inflation should help stabilize, and potentially lower, longer-term Treasury yields,” he said adding today’s projections reinforce the Fed’s inflation-fighting message. Sixteen of the 18 participants expect at least one additional rate increase this year, suggesting today’s move is not necessarily a one-time adjustment.
“For equity markets, stabilisation in longer-term rates would be constructive and allow attention to shift increasingly toward corporate fundamentals and the upcoming third-quarter earnings season,” he added.