Gift Nifty signals weaker Indian open after Fed holds rates steady

what happened

Indian stock markets are likely to open lower on Thursday, Moody's reports, even though the US Federal Reserve kept rates unchanged overnight. Gift Nifty at 22,660 points to a gap-down opening of roughly 100 points for the Nifty. Analysts expect volatility to persist, with stock-specific moves driven by second-quarter earnings.

Thomas Priju of Karma Capital argued that the Fed decision should not be read as a dovish signal for global equities. The vote was 10 to 2, with two policymakers backing a 25-basis-point hike, and markets are increasingly pricing in another increase in December. Further US rate hikes could keep Treasury yields and the dollar high, straining capital flows to emerging markets.

Meanwhile, Asian shares advanced in early trade, with Japan's Nikkei 225 and South Korea's KOSPI both up more than 0.5%. Ponmudi R of Enrich Money said elevated crude prices and geopolitical uncertainty are likely to cap any sustained rally in domestic markets.

why it matters

For Indian equities, domestic earnings growth, valuations and foreign investor flows matter as much as external cues. Expectations of further US rate increases support the dollar and raise risks for emerging-market assets.

market impact

Indian stocks: weak external cues and Fed rate expectations weigh on the Nifty open

• ▼Nifty pressure down — gap-down signal from Gift Nifty and risk of capital outflows from emerging markets
• ▲Dollar pressure up — expectations of another Fed rate hike in December support the currency

instruments