The US Federal Reserve’s rate decisions ripple far beyond American shores. For Indian equity markets, the key transmission channels are FII flows, the INR/USD rate, and domestic bond yields.
A genuine pivot — sustained rate cuts — historically draws capital back into emerging markets. But a “pause” with hawkish language can keep the dollar strong and pressure FII allocations to India.
We map the three most likely scenarios and their sector-level implications for Indian equities: what benefits, what faces headwinds, and where patient capital may find its next compass reading.