NIFTY FALLOTHES: Markets Slip 3% as US Fed Cues Rate Cut Pacing S slowdown

Mumbai, November 18 (Alayaran.com): The Indian stock market slumped by over 3 per cent on Monday, weighed down by selling pressure from the domestic IT sector, as investors anticipate a possible reduction in pace of rate cuts by the US Federal Reserve.

The Nifty 50-share index touched a low of 16,734, down 294 points, or 1.79%, from its previous close of 17,028 at 11:30 am IST on Monday, according to brokerage firm Kotak Securities.

Analysts believe that if the Fed decides to slow down its rate-cutting trajectory, it would impact the IT sector which is heavily reliant on US growth. The sector has seen a significant sell-off in recent days, with shares of leading players like TCS and Infosys falling by over 5% each.

The US Federal Reserve yesterday hinted at a possible slowdown in its pace of rate cuts this year, citing economic signs that are increasingly indicating slowing inflation. Analysts expect the Fed to cut interest rates for the third time soon.

The domestic equity market is watching the developments with bated breath as the US Fed's stance has consistently influenced the Indian stock market.

Market experts believe that if the US Fed holds rates steady or cuts them just once, there would be a sell-off in the dollar and a subsequent rise in the rupee. This could positively impact Indian exporters who are struggling due to the weak currency against the US competitor currencies like euro and yen.

However, if the rate cut expectations continue to get pushed back to mid-2025 or beyond, it would likely put India's current fiscal position under further pressure.