Fed Rate Cut Impact: Sensex, Nifty 50 Rally Led by Banks & IT; Gold Prices Slip as Experts Weigh In

Mumbai | September 18 – The U.S. Federal Reserve’s rate cut has shifted global sentiment, breaking a long pause in monetary easing and offering relief to investors concerned about slowing growth. The move has already lifted Indian benchmarks, with the Sensex and Nifty 50 extending gains as IT and banking stocks outperformed. Market watchers are now focused on how this policy change will influence Indian equities in the coming quarters.

Fed Rate Cut Triggers Global Market Rally

The U.S. central bank announced its first policy easing of 2025, trimming rates to 4%–4.25%. The decision, taken at the end of a two-day FOMC meeting, reflected concerns over cooling labour conditions and a still-elevated inflation trajectory.

Asian markets opened higher in response, and Indian equities mirrored the momentum. The Nifty 50 closed at 25,330.25, moving decisively past the earlier ceiling of 25,250, while the Nifty IT index rose more than 1.5%, underscoring optimism about export-driven earnings and global demand resilience.

Why Did the Fed Cut Rates?

The Fed pointed to a cooling labour market and persistent inflation pressures:
– US GDP growth forecast: 1.6% in 2025, slightly higher than June’s projection.
– Unemployment: projected at 4.5% by end-2025.
– Inflation: PCE inflation expected at 3% in 2025, staying above the 2% target until at least 2027.

While inflation remains sticky, Fed Chair Jerome Powell highlighted rising risks to growth and jobs as justification for the cut.

Market observers captured the mood with a quip:
“The Fed Cuts, Wall Street Yawns. Wish granted – like a dog chasing cars, Wall Street didn’t know what to do with itself once it finally got its rate cut.”

Despite the policy easing, the S&P 500 remains near record highs, fuelling debate over the so-called “Recession That Never Was.”

What This Means for Indian Equities

According to Vikram Kasat, Head of Advisory at PL Capital, the Fed’s move has acted as a strong global trigger for Indian equities.

“Nifty has decisively closed above 25,250, confirming a breakout. Momentum remains intact with support levels at 20HMA 25,209 and 40HEMA 25,130, while upside potential continues to build,” Kasat said.

He added that sectors such as banking and IT are expected to benefit the most from global liquidity, while steady foreign inflows could further strengthen India’s market resilience.

Meanwhile, gold prices fell as the dollar strengthened, shifting investor appetite back to equities.