Indian Equities Recover as Markets Await US Federal Reserve Policy Decision

Indian benchmark indices, the Sensex and Nifty 50, posted marginal gains in early trading on Wednesday, December 10, 2025, rebounding after two consecutive sessions of declines. This initial buying activity was primarily driven by investor positioning ahead of the conclusion of the US Federal Reserve's policy meeting, which was influencing global market sentiment. The recovery followed a notable downturn on Tuesday, December 9, when the BSE Sensex fell 436.41 points, or 0.51%, to close at 84,666.28, and the Nifty 50 dropped 120.90 points, or 0.47%, settling at 25,839.65. This previous retreat was attributed to subdued international cues and general investor caution preceding the Federal Open Market Committee (FOMC) announcement.

By 9:30 am on December 10, the Sensex had climbed 127.93 points to 84,794.21, and the Nifty 50 gained 60.15 points to trade at 25,899.80. Sectoral analysis showed metal and auto stocks leading the early advances, suggesting value-buying at lower levels following the prior day's slump. Broader market indices also reflected positive momentum, with the BSE Midcap gaining 0.26% and the BSE Smallcap index rising by 0.09% in early trade. The market breadth supported the early gains, with 1,631 stocks trading in the green against 787 in the red within the Nifty pack.

The primary focus for global positioning remains the US Fed's two-day meeting, which concluded on December 10. Market expectations heavily favored the FOMC implementing a 25-basis-point rate cut, which would place the federal funds rate in the 3.50%–3.75% range, the lowest level since September 2022. However, this expectation is complicated by reports of significant internal divisions within the FOMC regarding the necessity of further easing, as officials balance softening labor market data against persistent inflation concerns. Bank of America economist Aditya Bhave noted that Federal Reserve Chair Jerome Powell faces a highly divided committee, suggesting a potential for a 'hawkish cut' accompanied by cautious forward guidance.

Underlying domestic support remained evident in institutional flows from the previous day. On Tuesday, December 9, Foreign Institutional Investors (FIIs) were net sellers of equities worth ₹3,760.08 crore. Conversely, Domestic Institutional Investors (DIIs) provided substantial support, registering net purchases totaling ₹6,224.89 crore, which helped cushion the market from foreign capital outflows. Further positive context came from India's macroeconomic data, including the Asian Development Bank raising its 2025 GDP projection to 7.2% from 6.5% following an 8.2% growth in the September quarter.

In corporate regulatory news, the Directorate General of Civil Aviation (DGCA) issued a directive to IndiGo on December 9, 2025, mandating a 10% reduction in its Winter Schedule, doubling an initial 5% cut. This action followed an operational review showing IndiGo operated only 59,438 flights in November 2025 against an approved 64,346, resulting in 951 cancellations that month. Civil Aviation Minister K Ram Mohan Naidu stated the reduction was necessary to stabilize operations disrupted by crew rostering and resource deployment issues. The market's tentative confidence on December 10 now turns to Chairman Powell's press conference scheduled for December 11, 2025, for indications regarding the 2026 policy trajectory.