Fed Near Neutral Signals Caution Ahead, Shifting Focus to Fixed Income in 2026 
- Today in a surprise move Reserve Bank of India (RBI) surprised the market with another 25 basis points rate cut that moved the lending rate to 7.5 percent. Cash reserve ratio is maintained at 4 percent.
- This is the second policy move by Governor Raghuram Rajan this year out of its scheduled policy meet.
- Nifty, the benchmark stock index cheered the move and swiftly trading above 9000 level. The index traded as high as 9119 but gave up parts of the gain due to profit booking at this record level.
- Global investors are very positive over India, since a new government led by Prime Minister Narendra Modi came to power in 2014. The government since then tried to move swiftly to balance the deficit and faltering growth.
- The market was already cheering the recent moves in the Union Budget namely sharp increase in infrastructure and tax reduction by 5 percent over the next four years.
- Fall in oil price has reduced the inflationary pressure and put it inside the comfort zone of RBI to cut rates. INR traded close to 61.5 after the move but gave up the gain against dollar as RBI still preventing the currency to appreciate and instead building up the forex reserve.
- Indian stocks are expected to do well in this year compared to many of its emerging market peers. Despite so some correction could be ahead in the horizon as the market is showing some exhaustion. Buyers are expected to emerge at dips.
Nifty is currently trading at 9040 level still up 0.5 percent for the day and more than 10 percent for the year. INR is trading at 61.9 down 0.17 percent for the day.
