US Fed Holds Key Interest Rates: Dalal Street Opens the Day on Guard, Not in a Rush

Indian markets step into the new trading day with measured confidence, not excitement. After two straight sessions of gains, Dalal Street seems to be taking a pause. The reason sits halfway across the world. The US Fed holds key interest rates, just as markets expected. No shock. No surprise. And that, in itself, sets the tone.

At Samco Securities, the mood reads calm but cautious. This isn’t a market ready to sprint. It’s one that’s choosing to walk, eyes wide open.

Market Performance: A Flat Start Signals Waiting Mode

Early indicators suggest a steady opening rather than a strong directional move.

• Gift Nifty was trading around 25,371 at about 8:30 AM
• Nifty 50 closed the previous session at 25,342.75

The narrow gap between the two tells a simple story. Traders are not positioning aggressively. They’re waiting.

Over the last two sessions, both the Nifty and Sensex have climbed close to 1%. That bounce came after the India–EU free trade agreement announcement, which lifted sentiment briefly. But momentum is already slowing as fresh global cues settle in.

Main News: US Fed Holds Key Interest Rates, Markets React Calmly

The core global trigger is clear. The US Fed holds key interest rates, choosing stability over action. For markets, this was already priced in.

There was no sudden jolt across global equities overnight. Wall Street closed with modest gains. Asian markets, however, opened about 0.5% lower, reflecting hesitation rather than optimism.

The Fed’s stance signals two things:

• Inflation in the US is still above target
• Economic growth remains steady enough to avoid immediate rate cuts

Right now, markets are not pricing in any US rate cut before June. Higher US interest rates continue to support the dollar and Treasury yields. That combination often pulls liquidity away from emerging markets like India.

So while the decision brought clarity, it didn’t bring comfort.

Weak Start to 2026 Keeps Investors on Edge

Despite the recent rebound, the broader picture remains fragile.

The start of 2026 hasn’t been kind to Indian equities. Foreign selling continues to weigh heavily on sentiment.

Here’s how the numbers stack up:

• $19 billion was pulled out by foreign investors in 2025
• Driven by US trade policy worries and uneven corporate earnings
• In the current month alone, foreign investors have sold equities worth Rs 43,292.62 crore

There was a brief pause on Wednesday:

• Rs 480.26 crore worth of shares bought by foreign institutional investors

But one buying session doesn’t change a trend built over months.

Broader Market Shows Risk Aversion Clearly

The pressure isn’t limited to frontline indices. The pain is visible across the board.

Month-to-date performance:

• Nifty: down around 3%
• Small-cap index: lower by about 5.2%
• Mid-cap index: down nearly 3.4%

This spread tells a familiar story. When uncertainty rises, risk appetite fades first. Investors step away from mid and small caps before they touch large caps.

And right now, caution is winning.

Global Cues Matter, But Domestic Triggers Hold the Key

While global markets digest the fact that the US Fed holds key interest rates, domestic cues are starting to take center stage.

Investor focus is now shifting to the Union Budget for FY 2026–27, scheduled for February 1. Markets will also see a special trading session on Sunday, adding another layer of anticipation.

With foreign flows uncertain and global signals mixed, the budget could shape short-term market direction. Traders will be watching closely for:

• Growth support measures
• Signals on fiscal discipline
• Visibility on earnings momentum

Until then, markets may continue to move sideways, reacting more to headlines than conviction.

Company Details: Not a Stock-Specific Story, But a Macro One

This phase is not about individual companies or stock-specific action. It’s a macro-driven market.

Global liquidity, foreign flows, and policy clarity are steering sentiment. When the US Fed holds key interest rates, it keeps pressure on emerging markets while also limiting panic.

For Indian equities, that means stability without excitement.

Summary: Calm on the Surface, Caution Underneath

To sum it up, the market is breathing, but it’s not relaxed.

• The US Fed holds key interest rates, removing uncertainty but not risk
• Indian markets signal a flat, cautious opening
• Foreign investor selling remains a key concern
• Broader indices show clear risk aversion
• The Union Budget now becomes the next major trigger

This is not a market rushing into positions. It’s a market watching every step, waiting for clarity—both global and domestic—before choosing its next move

Source: India Today