Indian Stock Market Awaits US Fed Decision: Will It Bring Cheer or Fear?

Indian Stock Market Outlook

The Indian stock market is expected to remain stable on Wednesday, with the Sensex and Nifty 50 likely to open slightly lower ahead of the US Federal Reserve’s policy decision due later today. The Sensex and Nifty 50 extended losses for the second consecutive session on Tuesday, amid weak global cues ahead of the US Fed policy outcome.

Key Market Cues

• The Sensex closed 436 points, or 0.51%, lower at 84,666.28, while the Nifty 50 ended the day with a loss of 121 points, or 0.47%, at 25,839.65.
• The mid- and small-cap segments, however, erased losses and finished higher, outperforming the benchmarks. The BSE Midcap index ended 0.60% higher, while the Smallcap index jumped 1.27%.

Expert Insights

According to Vinod Nair, Head of Research, Geojit Investments Limited, "Domestic equities extending profit booking amid caution ahead of tomorrow’s US Fed policy decision, rupee weakness, persistent FII outflows, and ongoing uncertainty over the US–India trade deal. While the markets largely anticipate a 25-bps rate cut by the Fed, forward guidance for 2026 will be critical. In the near term, central bank commentary, currency movement, and FII flows will steer sentiment, while domestic macro resilience is expected to provide a cushion against downside risks."

Global Market Trends

Asian markets were also range-bound but in the green, as investors awaited fresh signals on the Federal Reserve’s policy stance ahead of its final rate decision of the year. Japan and South Korea saw gains, with the Nikkei 225 futures up 0.2% and Japan’s Topix rising 0.6%, while South Korean shares also advanced.

US Market Update

Most major US stock indexes slipped on Tuesday ahead of an expected Federal Reserve rate cut, though investors also braced for potentially hawkish commentary from policymakers. The Dow Jones Industrial Average declined 179.03 points, or 0.38%, to 47,560.29; the S&P 500 eased 6.00 points, or 0.09%, to 6,840.51; while the Nasdaq Composite inched up 30.58 points, or 0.13%, to 23,576.49.

US Fed Policy Decision

All eyes are on the Federal Reserve’s policy announcement later today, December 10. While a rate cut is widely anticipated, several strategists expect sharp divisions within the committee. Markets have largely priced in a 25-basis-point cut despite mixed US macro data. CME’s FedWatch Tool shows traders assigning an 89% probability to a 25-bps reduction.

Other Key News

• India and the US will launch three-day discussions on the first phase of their proposed bilateral trade agreement from December 10.
• Paramount Skydance Corp. and Netflix Inc. are preparing for a showdown they expect will extend well into 2026 over the acquisition of Warner Bros. Discovery Inc.
• The US dollar and Treasury yields inched higher on Tuesday ahead of an expected Federal Reserve rate cut.
• Gold prices climbed on Tuesday as traders stayed optimistic ahead of the U.S. Federal Reserve’s interest rate decision, while silver surged to an unprecedented $60 per ounce amid tightening supply conditions.
• Oil prices slipped again on Tuesday after a 2% decline in the previous session, as traders monitored peace talks aimed at ending Russia’s war in Ukraine, weighed concerns over ample global supply and awaited the U.S. interest rate decision.