The US Federal Reserve's first interest-rate hike in three years has strengthened the dollar and pushed up US bond yields, while equity markets are looking for direction after Wall Street ended lower following the decision.
Asian markets were mostly higher on Thursday and US stock futures also gained. Crude oil prices eased after a sharp fall the previous day.
For Indian markets, however, the picture remains mixed. The rupee could come under pressure from the stronger dollar, while fresh tariff risks linked to Russian oil purchases add another layer of uncertainty.
The US House of Representatives has passed legislation that would give President Donald Trump authority to impose tariffs of up to 100 percent on countries buying Russian oil. India and China are among the major buyers that could potentially be affected. The legislation still requires further action before it becomes law.
As widely expected, the Federal Reserve raised its benchmark interest rate by 25 basis points to 3.75–4.00 percent.
It was the first US rate hike since 2023 and the first under the new Fed chair Kevin Warsh. The decision was unanimous. Persistent inflation and a resilient economy were key factors behind the move.
The Fed has also indicated that another rate increase could come before the end of the year, although the timing will depend on economic and inflation data.
President Donald Trump has repeatedly called for much lower interest rates, arguing that rates should be around 1 percent or below. The latest Fed decision therefore keeps the central bank and the White House on different sides of the rate debate.
US stocks moved lower after the rate announcement, although technology shares recovered part of their losses.
Dow Jones: 51,461.90, down 631.21 points or 1.21 percent
S&P 500: 7,551.81, down 33.92 points or 0.45 percent
Nasdaq Composite: 25,978.43, down 3.15 points or 0.01 percent
US futures were higher early Thursday:
Dow futures: up about 300 points or 0.58 percent
S&P 500 futures: up 0.54 percent
Nasdaq futures: up 0.66 percent
Asian equities were mostly in positive territory on Thursday.
Nikkei: up 0.80 percent
Australia: up 0.35 percent
Kospi: up 0.45 percent
Taiwan: up 1.90 percent
Hang Seng: down 1 percent
Shanghai: down 0.15 percent
GIFT Nifty rose to 23,242.50 in early trading after closing at 23,126 on Wednesday. It subsequently eased, indicating a potentially cautious opening for Indian equities.
On Wednesday, the domestic market extended its gains despite considerable volatility.
Sensex: 74,336.45, up 332.58 points or 0.45 percent
Nifty 50: 23,217.60, up 99 points or 0.43 percent
Bank Nifty: 56,292.45, up 497.70 points or 0.89 percent
Midcap 100: 60,879.20, virtually unchanged
Smallcap 100: 19,388.30, down 0.18 percent
Most sectors gained, led by FMCG, banks, realty and financial services. IT, pharma and healthcare stocks were under pressure.
Foreign investors remained net sellers, offloading ₹2,032.61 crore in the cash market. Domestic institutional investors were net buyers of ₹3,908.23 crore.
The dollar surged after the Fed rate decision.
Dollar Index: 100.35 in early trading
Euro: $1.1457
Pound: $1.3367
Yen: 156.16 per dollar
Chinese yuan: 6.71 per dollar
The US 10-year Treasury yield briefly moved above 5 percent after the Fed decision before easing to around 4.996 percent.
The stronger dollar is likely to put further pressure on the Indian rupee.
The rupee closed almost unchanged at ₹95.96 against the dollar on Wednesday after a volatile session.
However, the dollar's post-Fed strength pushed the rupee to around ₹96.13 in offshore forward trading early Thursday.
The key levels to watch are:
Dollar: around ₹96.13 in early offshore trading
Euro: ₹109.98
Chinese yuan: ₹14.31
Crude oil prices continued to decline after falling nearly 3 percent on Wednesday.
Brent crude fell $2.92, or 2.69 percent, to close at $105.83 a barrel and slipped further to around $104.75 early Thursday.
WTI crude was around $101.35.
The immediate trigger was expectations that disruption to a Saudi pipeline would be resolved soon.
Gold initially fell after the Fed's rate hike but recovered in early Thursday trading.
Gold: $4,265 an ounce at Wednesday's close
Early Thursday: around $4,308
Silver: $63.53 an ounce
In Keralam, 22-carat gold rose ₹200 on Wednesday to ₹1,12,520 per sovereign.
The US House of Representatives has passed a Russia sanctions bill that could allow the US president to impose tariffs of up to 100 percent on countries buying Russian energy.
India is among the countries that could potentially face such action because of its purchases of Russian crude. The legislation is not itself a tariff imposed on India; any such measure would depend on the subsequent legislative and executive process.
For Indian markets, the issue matters because a fresh US tariff could affect:
India's exports to the US
The rupee
Corporate earnings
Crude oil costs and inflation
The India-US trade relationship
The National Stock Exchange's much-awaited IPO opens for subscription today.
The anchor book raised ₹6,746 crore, with more than 150 institutional investors participating. Overseas funds accounted for about 43 percent of the anchor allocation.
The issue is expected to attract considerable attention from domestic and global investors.
The Tata Sons board is scheduled to meet today with the company's listing and leadership succession among the key issues.
The RBI has rejected Tata Sons' request to surrender its Core Investment Company registration, bringing the possibility of a stock-market listing back into focus. N Chandrasekaran's decision not to seek another term as chairman has added another layer to the issue.
Reports indicate that views within the Tata group differ on both the listing question and Chandrasekaran's continuation. Noel Tata is reported to favour keeping Tata Sons private, while some board members may support his continuation. These remain reported positions rather than confirmed decisions.
Indian ADRs in New York ended mixed:
HDFC Bank: $22.44
ICICI Bank: $28.02
Infosys: $11.21
Wipro: $1.689
Infosys and Wipro recovered in extended trading after falling during the regular session, while ICICI Bank remained under pressure.
Industrial metals rebounded after several days of weakness.
Copper: up 1.29 percent to $14,225.85 a tonne
Aluminium: up 1.29 percent to $3,277.16
Lead, zinc and tin: higher
Nickel: lower
International rubber prices continued to decline.
Bangkok RSS1 fell to $279.20 per quintal and RSS3 to $275.70. A stronger dollar was among the factors weighing on prices.
The Kerala market remained around ₹27,400 per quintal.
Cocoa gained 1.55 percent to $5,860 a tonne.
The market had recently come under pressure after higher Ivory Coast exports and rising ICE inventories. However, expectations of lower production in Ivory Coast and Ghana in the 2026–27 season have provided some support.
Arabica coffee fell 1.37 percent to $2.798 a pound amid expectations of record Brazilian production. Brazilian exports rose sharply in August.
Palm oil remained around 4,884 Malaysian ringgit a tonne.
Bitcoin: above $76,500
Ether: above $2,430
Solana: above $99
Sensex — 74,336.45 — +0.45%
Nifty 50 — 23,217.60 — +0.43%
Bank Nifty — 56,292.45 — +0.89%
Midcap 100 — 60,879.20 — 0.00%
Smallcap 100 — 19,388.30 — -0.18%
Dow Jones — 51,461.90 — -1.21%
S&P 500 — 7,551.81 — -0.45%
Nasdaq — 25,978.43 — -0.01%
US dollar — ₹95.96 — unchanged
Gold — $4,265 — -$29.90
Gold, 22K Keralam — ₹1,12,520 per sovereign — +₹200
Brent crude — $105.83 — -$2.92