INDIA STOCKS-Indian shares flat at the open ahead of Fed policy decision

BY Reuters | ECONOMIC | 09/17/24 11:53 PM EDT

(Updates at 9:18 a.m. IST)

BENGALURU, Sept 18 (Reuters) - Indian shares were flat at the open on Wednesday and are expected to tread water through the session ahead of the U.S. Federal Reserve's rate decision and commentary.

The Nifty 50 index was down 0.07% at 25,396.2 points, while the S&P BSE Sensex shed 0.1% at 82,997.04, as of 9:18 a.m. IST.

Other Asian markets were also muted.

While the Fed is widely expected to lower rates, the size of the cut, whether 25 basis points or 50 bps, was still not clear.

The odds of a 50-bps cut have climbed to 65% from 34% last week.

While a bigger rate cut boosts the likelihood of foreign investors shifting funds to emerging markets such as India in search of higher returns, it has also prompted fears that the Fed may have delayed the start of its easing cycle a little too long, at the cost of economic growth.

The Fed's reason for its decision and its commentary on future policy will influence the near-term trajectory of Indian equities in terms of foreign inflows and the outlook for U.S.-dependent sectors such as IT and pharma, three analysts said.

Eight of the 13 major sectors logged gains. The small- and mid-caps were little changed. (Reporting by Bharath Rajeswaran in Bengaluru; Editing by Savio D'Souza and Nivedita Bhattacharjee)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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