Indian shares are likely to drop at open on Thursday after the US Federal Reserve projected fewer interest rate cuts next year, citing sticky inflation and strength in the world’s largest economy.
The Gift Nifty futures were trading at 23,929 as of 8:01 a.m. IST, indicating that the benchmark Nifty 50 will open below Wednesday’s close of 24,198.85.
The US central bank delivered a 25-basis-points rate cut overnight, as was widely expected, but forecast just two quarter-percentage-point reductions in 2025, which is half a percentage point less in easing next year than officials had anticipated in September.
The odds of a January rate cut fell to 6% in early Asia hours on Thursday from 16% recorded ahead of the Fed decision, the CME FedWatch tool showed.
Rate cuts in the US typically help emerging market assets, such as Indian equities, as they boost foreign inflows.
Banks drag Indian shares lower, Fed outlook in spotlight
The Fed’s caution pushed Wall Street equities sharply lower overnight and triggered a slide in Asian peers early on the day.
The Nifty 50 and BSE Sensex have lost over 2% each so far this week as worries of the Fed forecasting a shallower rate cut path in 2025 led risk-averse foreign investors to offload Indian stocks.
They net sold local shares worth 13.17 billion rupees ($155 million) on Wednesday, exchange data showed.
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