Nifty Set to Rise on Fed Rate Cut Optimism; FPI Flows May Rebound

Indian equities are poised for a strong opening as Gift Nifty futures trade 127 points above previous close at 25,550. The Federal Reserve's 25bps rate cut and forward guidance signaling two additional cuts in 2025 have improved risk appetite globally. Market participants anticipate renewed foreign portfolio investment flows into Indian large-caps following sustained FPI selling pressure.

"The Fed is clearly prioritizing growth over inflation concerns," said Deepak Agarwal of Kotak Mutual Fund. Yield curve dynamics suggest steeper rates ahead, while GST reductions in India increase the probability of RBI easing by October 2025. Analysts note the unemployment rate spike appears to be driving Fed policy more than revised inflation projections.

Value-oriented large caps may see particular interest as FPIs potentially rotate back into emerging markets. The rate decision comes as domestic markets show resilience despite global macro uncertainties, with several sector-specific stocks including financials and commodities expected to lead Thursday's session.