The US Federal rate has lowered its benchmark interest rate to 4.75–5%. It is a reduction of 50 basis points. In response to the US economy’s slowing growth and declining inflation, the Fed has lowered interest rates for the first time since 2020.The action has sparked worries about the US economy’s stability. Markets all around the world, including India, are predicted to be impacted.
Effect of us fed rate on Indian stock market
Experts predict that there may be some ups and downs in the Indian stock market in the near future. This is due to the fact that shifts in US interest rates frequently induce modifications in international markets, and investors may respond negatively to uncertainty. But with its robust economic standing, India might still draw in foreign capital. It could eventually help the stock market.“In the short term, the Indian market may face some volatility, but in the medium to long term, India could still attract overseas investment due to its economic prospects,” stated Swapnil Aggarwal, Director of VSRK Capital. The stock markets would benefit from this.”
Which sector will be affected most with us fed rate cut
Indian exports may be impacted by the rate reduction as well, especially in industries like IT services that rely significantly on the US market. Reduced demand for Indian goods and services could result from further slowdown in the US economy.This could reduce India’s export revenue. Aggarwal also made the observation that there would be less of a market for Indian exports, particularly in IT services, if the US economy slowed down. This can have an impact on India’s overall export results.
Effect of us fed rate cut on rupees
Positively, India may profit short-term from a stronger Indian rupee and possible capital inflows.A stronger rupee can help the nation’s trade balance by lowering the cost of imports. These advantages might not endure, though, if the US economy keeps having problems.Experts predict that in order to follow the worldwide trend, the Reserve Bank of India (RBI) may also think about lowering interest rates.Before 2025, according to some analysts, the RBI may cut rates by 25 to 50 basis points; however, this would depend on how the US economy develops and how foreign investors modify their holdings.
Best investment strategy after us fed rate cut
It is urged that investors exercise caution going forward. During this uncertain time, industries like pharmaceuticals and fast-moving consumer goods (FMCG) are advised as safer bets. While market instability persists, precious metals such as gold and silver are also recommended as beneficial additions to portfolios. Indian stocks may gradually climb if the US economy makes a “soft landing” and escapes a recession. On the other hand, mid and small-cap segments may experience higher volatility if the outlook for the world economy deteriorates.
