How a 0.25% U.S. Rate Cut Affects the Indian Stock Market:
- More Foreign Investment: A U.S. rate cut can make Indian stocks more attractive, leading to more capital inflows and potentially higher stock prices.
- Rupee Strengthening: The Indian Rupee may strengthen, which is good for imports but can hurt exports (like IT and pharmaceuticals).
- Lower Interest Rates in India: The RBI may keep rates low, making loans cheaper and boosting domestic spending and investment.
- Global Sentiment: A rate cut can signal global slowdowns but also push investors to take more risks in emerging markets like India.
In summary, a U.S. rate cut can bring more foreign money to India, strengthen the rupee, and benefit the stock market, but hurt exports in the short term.