Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
India’s equity benchmarks experienced a slight downturn on Thursday, following the Federal Reserve’s decision to cut interest rates as anticipated, but also raising uncertainties about further reductions in 2025. Investors are also closely monitoring developments from trade discussions between the United States and China. The Nifty 50 declined by 0.45% to 25,935.9, while the BSE Sensex fell 0.44% to 84,626.81 by 9:41 a.m. IST.
Federal Reserve’s Cautious Stance
The Federal Reserve implemented a 25-basis-point interest rate cut. However, Chair Jerome Powell indicated that this might be the final reduction for the year, citing a lack of official data during an ongoing federal government shutdown. Ross Maxwell, global strategy lead at VT Markets, noted that the Fed’s cautious approach could lead to increased volatility in equities and potentially higher bond yields if market expectations for deeper cuts diminish.
U.S.-China Trade Talks
In parallel developments, President Donald Trump engaged in discussions with China’s Xi Jinping at a South Korean air base on Thursday. Both leaders expressed optimism regarding the potential de-escalation of trade tensions between the two nations.
Sectoral Performance and Key Movers
All 16 major sectors saw declines in early trading, with pharmaceutical stocks recording the steepest fall at 1.1%. Dr. Reddy’s Laboratories, a prominent drugmaker, was among the top losers on both the pharmaceutical and Nifty indexes, dropping approximately 4.5%. This decline followed a notice of non-compliance from Canada’s Pharmaceutical Drugs Directorate concerning its semaglutide injection. JP Morgan commented in a note that this setback is expected to delay the company’s planned first-to-market launch in January, potentially eroding its first-mover advantage.
Conversely, infrastructure major Larsen & Toubro saw a 2.2% increase, reaching a record high. The rise came after the company reported strong quarterly profits and projected an improved annual order outlook. The broader small-cap and mid-cap indexes were down 0.1% and 0.3%, respectively.
Market Overview
India’s equity markets reacted to a combination of the Federal Reserve’s cautious interest rate cut and ongoing U.S.-China trade negotiations. Sectoral performances were mixed, with pharmaceuticals facing headwinds due to regulatory issues, while infrastructure stocks showed resilience following positive earnings reports.
