Indian stocks extend losses as investors await clarity on US rate outlook

India’s stock benchmarks extended losses on Wednesday on concern the U.S. Federal Reserve may signal a more hawkish 2026 outlook ahead of the expected rate cut later in the day.

The Nifty 50 the BSE Sensex eased 0.32% each to 25,758 and 84,391.27 points, respectively.

The indexes have fallen about 1.6% each over three sessions this week on persistent foreign selling amid Fed caution and uncertainty over a U.S. trade deal.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3% ahead of the Fed decision.

The Fed is widely expected to cut rates at its ongoing meeting, but investors expect policymakers to remain divided.

“The 2026 interest rate projections are widely dispersed, with a fragile median at 3.375%, suggesting one rate cut in 2026 after a December cut, way more hawkish than current market pricing,” said Xiao Cui, senior economist at Pictet Wealth Management.

Higher U.S. rates typically make emerging market equities less appealing to foreign investors.

Uncertainty over the 2026 policy path, alongside delays in the India-U.S. trade deal and the risk of higher rates, has added to market jitters, said Nachiketa Sawrikar, fund manager at Artha Bharat Global Multiplier Fund.

Eleven of the 16 major sectors fell. The heavyweight financials and IT lost 0.5% and 0.9%, respectively.

Small-caps and mid-caps fell 0.9% and 1.1%.

E-commerce firm Meesho soared 53.2% in its debut as investors backed its asset-light, zero-commission model.

IndiGo slipped 3.3% after the government ordered the carrier to cut 10% of planned flights following at least 2,000 cancellations last week.

AU Small Finance Bank gained 2.2% after receiving approval from the Ministry of Finance to lift the foreign investment limit to 74% from 49%.