India stock benchmarks set to open higher after Fed rate cut

India’s equity benchmarks are poised to open higher on Thursday after three sessions of losses, buoyed by the U.S. Federal Reserve’s widely expected 25-basis-point rate cut, which could limit foreign outflows from domestic stocks.

The Gift Nifty futures were trading at 25,960 points as of 7:22 a.m. IST, indicating that the benchmark Nifty 50 will open above Wednesday’s close of 25,758.

Other Asian markets  opened higher, rising 0.4%. Overnight, Wall Street equities advanced after the Fed decision.

Fed Chair Jerome Powell declined to offer any clear guidance on whether another rate cut is likely in the near term. However, investors still drew some optimism from his remarks about significant downside risks to the labour market and the central bank’s reluctance to push down job creation.

Lower interest rates in the U.S. make emerging markets such as India more attractive to foreign investors.

Both Nifty and Sensex lost about 1.6% each in the last three sessions, hurt by sustained foreign outflows on Fed caution and uncertainty over a trade deal with the U.S.

Foreign portfolio investors have sold domestic equities worth $1.56 billion so far in December, nearly four times the $425 million outflows recorded in November.

In fact, 2025 will likely see the biggest ever sale of Indian equities by FPIs, standing at about $18 billion as of Wednesday.

While the Fed rate cut could spur a near-term pullback rally in domestic markets, a sustained rise will depend on the ongoing December quarter earnings and a favourable India-U.S. trade deal, two analysts said.