Indian share market opens in red as US Fed warns of fewer rate cuts in 2025

The Indian stock market opened in the red on Thursday after the US Federal Reserve cut interest rates by 25 basis points but warned that rate cuts in 2025 may not be as frequent as previously anticipated.

With the Fed’s focus shifting towards maximum employment and price stability, the Federal Open Market Committee (FOMC) reduced the number of rate cuts expected for 2025.

“After the sharp negative reaction in US markets to the overall commentary, all Asian markets have opened negatively as well,” said market experts.

At around 9:30 am, the Sensex was trading at 79,158.53, down 1,023.67 points or 1.28%, while the Nifty stood at 23,892.4, declining by 306.45 points or 1.27%.

The market trend remained negative. On the National Stock Exchange (NSE), 223 stocks were in the green, while 2,029 stocks were in the red.

Nifty Bank fell 783 points or 1.50% to 51,356.55, while the Nifty Midcap 100 index was at 57,779.40, down 943.85 points or 1.61%. The Nifty Smallcap 100 index stood at 18,885.65, falling 344.70 points or 1.79%.

In the Sensex pack, Infosys, HCL Tech, Asian Paints, Tata Steel, Tech Mahindra, Tata Motors, SBI, JSW Steel, and Bajaj Finance were the top losers, while Hindustan Unilever and ITC were the top gainers.

Contrary to expectations, the Fed’s forecast for the upcoming rate trajectory now includes only two subsequent 25 basis point cuts in 2025, down from the earlier expectation of four cuts next year.

“When valuations are high, the market only needs a trigger to correct sharply. This trigger was provided by the Fed guidance of fewer rate cuts in 2025, which went against market expectations,” said experts.

“Although the 25 basis point rate cut was in line with market expectations, the indication of just two cuts of 25 basis points each in 2025, instead of three or four, spooked the market, leading to a sharp sell-off in Wall Street,” they added.

The Dow Jones declined by 2.58%, closing at 42,326.87. The S&P 500 dropped 2.95% to 5,872.20, and the Nasdaq fell 3.56%, closing at 19,392.69.

In the Asian markets, the markets of Jakarta, Bangkok, Seoul, Japan, China, and Hong Kong were all trading in the red.

According to experts, sharp declines in the market today will provide opportunities for investors to buy.

“The broader market will be impacted less despite high valuations since the FII impact will be negligible in this segment. Therefore, there can be a sharp bounce back in growth stocks in this segment,” they noted.

Foreign institutional investors (FIIs) sold equities worth Rs 1,316.81 crore in India on December 18, while domestic institutional investors bought equities worth Rs 4,084.08 crore on the same day.