Macro
Confidence 0.82
US Federal Reserve raises interest rates for the first time in three years
What happened
The US Federal Reserve has increased interest rates by 25 basis points, marking the first hike since 2023. This decision is expected to have significant implications for global markets, including the Indian stock market.
Causal chain
US Fed raises interest rates Higher US bond yields FII outflows from Indian equities
India impact
Negative
- − Heavy FII selling exerts bearish pressure on Nifty 50 and Bank Nifty.
Sector impacts
Nifty 50 −
Heavy FII selling of ₹2033Cr despite DII buying, and mixed global cues.
Nifty Bank −
FII outflows and potential upward pressure on interest rates from RBI liquidity absorption.
Short term (1–4 weeks)
Increased volatility expected in Indian markets.
Long term (3–6 months)
Potential for sustained bearish sentiment if FII outflows continue.
Sources
- · US Federal Reserve hikes interest rates – but will RBI follow suit?
- · US Federal Reserve raises interest rates for first time in three years