Business

Fed is likely to cut rates. Will this lead to a correction in Indian markets?

Indian markets are getting jittery ahead of the FOMC meeting, but analysts believe it is only a short-term phenomenon, as the rate cut has already been factored in. Since valuations are expensive, could this become a profit-booking opportunity?

The US Federal Reserve rate cut at its Wednesday meeting is a certainty. The only debate is on the quantum — 25 bps or 50 bps. A shallower cut may seem as too little too late, whereas a larger cut could be construed as the economy weakening more than expected.

With the unemployment numbers in the US inching up and some arguing that the Fed is already behind the curve, expectations of a 50-bps cut are high. With the US 10-year government bonds.