Markets Set for Weak Start as Fed Signals Fewer Rate Cuts

Nifty and Sensex remain under pressure in the face of global uncertainty and limited foreign fund interest.

Due to pressure on investor confidence from ongoing geopolitical instability and lackluster global signals, the Sensex and Nifty are predicted to open lower on Wednesday. The cautious stance taken by the Federal Reserve of the US while lowering interest rates has further dampened the optimism.

Nifty50 is likely to open lower than its Tuesday close of 24,812.05. This is indicated by Gift Nifty futures, which were trading near 24,782 as of 8:23 am. Early trading saw a general decline in Asian markets, with the MSCI Asia ex-Japan index dropping 0.8%. Following the Federal Reserve's decision to maintain interest rates at their current level, Wall Street equities in the US finished flat overnight.

By reducing its projection to just two rate cuts by the end of 2025, the Fed also hinted that it would take longer to lower rates. The US Federal Reserve has maintained its key base rate in the range of 4.25 to 4.25% for the sixth successive week. Although this was anticipated, investors were taken aback by the Fed's cautious stance. The original projection of a 50 basis point cut in 2026 was lowered by only 25 basis points, authorities said.

US President Donald Trump's ambiguous policy stance, signs of the US economy's vulnerability, and rising Middle East tensions have all contributed to the increasingly precarious global economic outlook. According to Fed Chair Jerome Powell, new tariffs may cause summertime increases in the price of products. These are thought to be part of Trump's trade policy.