The US Federal Reserve cut its key interest rate by 25 basis points to 4%–4.25%, the first rate cut of 2025. The Fed also indicated two more cuts may happen later this year. The decision comes as US job growth slows and inflation remains higher than the Fed’s target.
Indian markets responded quickly to the news. The Sensex jumped over 447 points to 83,141, while the Nifty 50 rose 119 points to 25,449 in early trading. IT companies like Infosys, HCL Tech, Wipro, and Tech Mahindra led the gains. Banking stocks, including HDFC Bank and ICICI Bank, also rose. Analysts suggest that lower US rates make Indian markets more attractive to foreign investors.
Investors are optimistic about earnings growth and the developments or progress in India-US trade talks. The Fed rate cuts offer short-term support to Indian markets. The Bank Nifty remains robust, while investors see investment opportunities in the IT sector and the banking sector.
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Gold and silver prices dipped with the strengthening of the US dollar. Spot gold dropped 0.2% to $3,653.54 per ounce, while silver also fell. A stronger dollar makes metals more expensive for buyers outside the US. Domestic demand for gold is expected to stay steady during the festive season. Exporters in gems and jewelry may see some benefits from the lower rates.
Experts believe that the Fed’s rate cut was expected, so the market reaction and the gold price movements were measured. The impact on India also depends on the Reserve Bank of India’s future decisions. Some expect the RBI to keep rates unchanged in its October meeting owing to inflation and currency concerns.
Foreign investors consider India a favorable investment opportunity in the current low-interest-rate scenario. With the prospect of further Fed rate cuts, there may be an increased foreign inflow backing the IT, banking, and other sectors.
The Fed’s decision has created a positive mood for stocks, while gold and silver have taken a small hit. Investors now watch how global and domestic developments will shape market trends in the coming months.