Stock markets are expected to maintain their momentum on Thursday, buoyed by positive global cues. Following the US Federal Reserve’s anticipated interest rate cut, analysts predict a revival in foreign portfolio investments for Indian markets.
The Gift Nifty is indicating an opening gain of at least 120 points, set at 25,550, compared to Nifty futures which closed at 25,423.
Deepak Agarwal, Chief Investment Officer for Debt at Kotak Mutual Fund, noted that the Fed’s actions appear to prioritize growth. The Federal Open Market Committee (FOMC) reduced rates by 25 basis points and is forecasting an additional 50 basis points of cuts in calendar year 2025, despite upward revisions in growth and Core Consumer Price Index projections for the fourth quarter of 2026. Agarwal remarked, “The recent spike in the unemployment rate seems to be the main driver for the FOMC’s guidance. For the time, the market is pleased that the FOMC is willing to ease despite inflation projections being revised higher. The yield curve in the US is likely to become steeper. Fed rate cuts and lower inflation due to GST cuts increase the likelihood of a Reserve Bank of India rate cut in October 2025.”
Market experts believe that the US Federal Reserve’s decision may slow the selling pressure from foreign portfolio investors in Indian equities, potentially rekindling buying interest. They suggested that value-attractive large-cap stocks may witness increased purchasing activity.
Ross Maxwell, Global Strategy Lead at VT Markets, emphasized that the Fed is navigating a delicate balance following the recent 0.25% rate cut. He pointed out that “while the rate cut was anticipated, it is important to pay attention to Fed Chair Jerome Powell’s comments in the subsequent press conference, where he indicated that policy decisions remain challenging, and some committee members are still divided on the prospect of further cuts, with 10 out of 19 policymakers expecting two or more rate reductions this year.” He added that financial markets are likely to react positively to the rate cut in the short term, as reduced borrowing costs alleviate pressure on households and businesses. While equity markets may see temporary support, volatility in bond yields may persist as investors evaluate growth concerns against inflation risks.
In terms of foreign portfolio investment and futures and options (F&O) activity, analysts have noted strategic hedging moves by foreign portfolio investors. Despite offloading ₹11,330.08 crores in the cash market thus far in the month, FIIs have made strategic additions in index futures (₹4,727.78 crores) and options (₹6,739.97 crores), indicating hedging rather than outright bearishness, according to Ponmudi R., CEO of Enrich Money. Conversely, domestic institutional investors (DIIs) have infused ₹32,892.91 crores, buoyed by robust retail Systematic Investment Plan (SIP) inflows and sustained confidence in India’s long-term growth narrative. This steady domestic support has helped anchor sentiment amid external uncertainties.
Open Interest data reveals firm resistance at the 25,500–26,000 strikes, as rising call Open Interest suggests selling pressure. At the same time, concentrated put Open Interest at 25,150–25,000 indicates strong defensive positioning, reinforcing a support base. The overall shift in Open Interest indicates cautious optimism, with market participants hedging while remaining poised for a potential breakout.
Across Asia-Pacific markets, stocks are showing mixed results. Notably, Japanese and Korean stocks have experienced strong gains, while Australian stocks are down during early trading on Thursday. Other regional markets are fluctuating, registering gains of 0.2-0.5 percent.
Published on September 18, 2025.
