Indian stock market crashes in early trade; Rupee at all time low against USD

The Indian stock market took a steep dive on Thursday, reacting to the US Federal Reserve's latest monetary policy announcement. The Federal Reserve reduced interest rates by 25 basis points, taking the benchmark rate to 4.25-4.5%, but adopted a more hawkish stance on future rate cuts, triggering global market volatility.

The Sensex dropped nearly 1,000 points, or over 1%, in the opening session, settling around 79,179 points. The NSE Nifty Index mirrored the decline, falling 301 points to 23,897. Both indices witnessed an all-round sell-off as investors reeled under the Fed’s hawkish tone.

The rupee fell to an all-time low, quoting at ₹85.06 against the US dollar. The sell-off in Indian equity markets, coupled with a strengthening dollar, exerted pressure on the Indian currency.

The Federal Reserve's decision to adjust its inflation expectations for 2025 by an additional 30 basis points resulted in a sharp reaction from global markets. Bond yields surged, and the Dollar Index spiked to 108, further tightening financial conditions for emerging markets.

According to Ionic Wealth, the Fed's move to lower expectations for future rate cuts has introduced a "hawkish pause" that could weigh heavily on equities worldwide. This sentiment has been reflected in India's markets, with investors seeking safer assets amidst the uncertainty.

Experts suggest the ongoing turbulence may continue as global monetary policies remain uncertain. The Indian market is now closely watching domestic cues and global economic trends for signs of stability in the coming sessions.