Nifty Set to Soar 120 Points at Opening Bell as Fed Rate Cut Lures FPIs Back
Markets roar to life as dovish Fed pivot ignites bullish momentum
Foreign capital floodgates set to reopen
The Federal Reserve's rate cut finally gives institutional players the green light they've been waiting for—no more sitting on sidelines when free money's back on the table. Foreign portfolio investors, who've been playing it safe, now scramble for yield like tourists at a Black Friday sale. Suddenly everyone's a risk-on believer again.
Market mechanics shift into high gear
Liquidity surges through trading desks as algorithms recalibrate for the new rate environment. That 120-point gap up isn't just numbers on a screen—it's the sound of short covers getting steamrolled and bears rushing for exits. Trading volumes spike as pent-up demand meets renewed confidence.
Welcome to the Fed-induced sugar rush—where fundamentals take a backseat to cheap money and everyone suddenly becomes an expert again.
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According to market experts, the US Fed decision will likely slow the selling of FPIs in Indian equities and may revive buying interest. Value-attractive large-cap stocks may see buying interest, they added.
Ross Maxwell, Global Strategy Lead at VT Markets, said: The US Fed continues to face a delicate balancing act following a 0.25% rate cut at its latest meeting in September.
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“Whilst the rate cut was expected, it is of more note to listen to what Fed Chair Jerome Powell said in the Press Conference afterwards, where he mentioned that policy decisions remain challenging, and the committee members are still split on further rate cuts, with 10 out of 19 policy makers seeing two or more rate cuts this year,” said. Financial markets are likely to welcome the rate cut in the NEAR term, as lower borrowing costs ease pressure on households and businesses. Equity markets may see short-term support, though bond yields could remain volatile as investors weigh growth concerns against inflation risks, he added.
Cues from FPI & F&O
Meanwhile, analysts see smart hedging by foreign portfolio investors.
FIIs remain cautious, having offloaded ₹11,330.08 crores in the cash market month-to-date, said Ponmudi R, CEO - Enrich Money. However, their strategic additions in index futures (₹4,727.78 crores) and options (₹6,739.97 crores) reflect hedging activity rather than outright bearishness. Counterbalancing this, DIIs have infused ₹32,892.91 crores, supported by resilient retail SIP flows and confidence in India’s long-term growth story. This steady domestic support has anchored sentiment and offset external nervousness.
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Open Interest data indicates firm resistance around the 25,500–26,000 strike, where rising call OI suggests sellers may assert pressure. “At the same time, concentrated put OI at 25,150–25,000 highlights strong defensive positioning, reinforcing the support base. The balance of OI shifts suggests cautious optimism, with market participants hedging while staying positioned for an eventual breakout,” he added.
Meanwhile, Asia-Pacific stocks are mixed. Japan and Korean stocks show strong gains while Australian stocks are down in the early deal on Thursday. Others in the region are hovering around with gains of 0.2-0.5 per cent.
Published on September 18, 2025
