Fed rate cut or pause: What it can mean for Indian stock markets?

The US Federal Reserve held its Federal Open Market Committee (FOMC) meeting between December 9-10, and will be announcing the outcome of the meet later tonight around 11:30 p.m. (IST).

Analysts expect the American central bank to cut the key interest rate for the third straight time, driven by weak labour market.

Then how will the domestic markets react? Let's take three scenarios – no rate cut, 25 bps rate cut and 50 bps rate cut. Here's how market experts anticipate Indian stock markets to react in each of these scenarios:

Scenario 1: Fed cuts rates by 25 bps

A 25 basis point rate cut by the American central bank is mostly expected by analysts. Traders are pricing in an approximately 87 percent chance of a 25-basis-point rate cut today, according to CME's FedWatch Tool.

Shravan She