• The Indian stock market opened in red following the US Federal Reserve's decision to cut interest rates by 25 basis points.
• The Federal Open Market Committee has halved the number of rate cuts expected for 2025, causing a negative reaction in global markets.
• The Sensex and Nifty saw significant declines, with only a few stocks seeing gains.
• Despite the negative market reaction, experts believe this provides an opportunity for investors to buy, as the broader market will be less impacted.

The Indian stock market opened in red on Thursday, following the US Federal Reserve's decision to cut interest rates by 25 basis points. However, the Fed also warned that rate cuts may not come as easily in 2025 as previously anticipated. This shift in the US Federal Reserve's stance has sent ripples across global markets, with Asian markets also opening negatively.

The Federal Open Market Committee (FOMC) has halved the number of rate cuts expected for 2025, shifting its focus towards maximum employment and price stability. This move has led to a sharp negative reaction in the US markets, which has had a domino effect on Asian markets, including India.

At around 9:30 am, the Sensex was trading at 79,158.53, declining 1,023.67 points or 1.28 per cent, while the Nifty was trading at 23,892.4, declining 306.45 points or 1.27 per cent. The market trend remained negative with 223 stocks trading in green and 2,029 stocks in red on the National Stock Exchange (NSE).

Impact on Various Indices

The Nifty Bank was down 783 points or 1.50 per cent at 51,356.55. The Nifty Midcap 100 index was trading at 57,779.40 after dropping 943.85 points or 1.61 per cent, and the Nifty Smallcap 100 index was at 18,885.65 after dropping 344.70 points or 1.79 per cent.

In the Sensex pack, Infosys, HCL Tech, Asian Paints, Tata Steel, Tech Mahindra, Tata Motors, SBI, JSW Steel and Bajaj Finance were the top losers. On the other hand, Hindustan Unilever and ITC were the top gainers.

The Fed's forecast for the upcoming rate trajectory has only two subsequent 25 basis point cuts for 2025, contrary to earlier expectations of four 25 basis point cuts for next year. Market experts have noted that when valuations are high, the market only needs a trigger to correct sharply. The Fed's guidance of fewer rate cuts in 2025, which went against market expectations, provided this trigger.

Global Market Reactions

The rate cut of 25 basis points was in line with the market's expectation. However, the indication of only two cuts of 25 basis points each in 2025, against market expectation of three or even four cuts, spooked the market, resulting in a sharp sell-off in Wall Street.

The Dow Jones declined 2.58 per cent and closed at 42,326.87. The S&P 500 dropped 2.95 per cent to 5,872.20 and the Nasdaq declined 3.56 per cent to close at 19,392.69.

In the Asian markets, the markets of Jakarta, Bangkok, Seoul, Japan, China and Hong Kong were trading in red. Despite the sharp cuts in the market, experts believe that this will provide opportunities for investors to buy. They noted that the broader market will be less impacted despite high valuations since the Foreign Institutional Investors (FII) impact will be negligible in this segment. Therefore, there can be a sharp bounce back in growth stocks in this segment.

On December 18, Foreign institutional investors (FIIs) sold equities worth Rs 1,316.81 crore in India, while domestic institutional investors bought equities worth Rs 4,084.08 crore.