Nifty’s 0.43% rebound faces a test from the Fed’s hawkish turn

Indian equities recovered after the previous session’s sell-off, with financial and consumer names providing the main support. IT stocks were the principal drag. The rebound came as traders looked for relief buying ahead of the US Federal Reserve decision, while elevated crude prices, a weaker rupee and high global bond yields limited the recovery.

Nestle India, ITC, Mahindra & Mahindra, Tata Consumer Products, SBI, Hindustan Unilever and Reliance Industries were among the stocks cited as leading the advance. The reported support from FMCG and banking shares explains why the broader move was firmer in financials and consumer-facing companies than in technology.

TCS, Wipro, Infosys and Tech Mahindra were among the largest Nifty losers. The material available does not identify a company-specific trigger for the IT decline. A possible market interpretation is that higher US yields and the prospect of additional Fed tightening weighed on long-duration technology valuations, but that is an inference rather than a company statement.

The main policy development was the proposed 0.4% merchant discount rate on UPI person-to-merchant transactions above Rs 2,000, effective October 15. The Finance Ministry said the charge would apply to merchants and would not affect person-to-person payments. Market reports linked the announcement to gains in some banking, payment and ATM-related stocks because it could create a revenue stream for providers that have absorbed transaction costs.

The Union Cabinet also approved an increase in the monthly EPFO wage ceiling for mandatory coverage from Rs 15,000 to Rs 25,000. The government said the change could expand provident-fund coverage and contributions. The market implication is potentially relevant to household savings and financial-intermediation flows, although no immediate earnings estimate was provided in the available material.

The Appointments Committee of the Cabinet approved the reappointment of SEBI whole-time member Kamlesh Chandra Varshney beyond September 19, 2026. No new RBI policy decision was identified in the available material. August CPI inflation was reported at 4.8% year-on-year, but figures for IIP, GST, trade and PMI were not available in the supplied material.

The Federal Reserve raised its policy rate by 25 basis points to a target range of 3.75% to 4.00% on September 16, its first increase since 2023. The decision was broadly in line with expectations, but the updated projections and Chair Kevin Warsh’s remarks were read as leaving room for another increase this year.

US equities finished lower after the decision, while the dollar strengthened and the US 10-year Treasury yield returned to about 5.00%. Asian markets were set for a mixed opening, although Japanese and South Korean equities opened higher in early trading. For India, the combination of a stronger dollar, elevated US yields and firm crude prices raises pressure on the rupee, imported inflation and foreign portfolio flows.

Foreign institutional investors remained net sellers and domestic institutions provided support. One set of provisional exchange data cited FII net selling of Rs 2,032.61 crore and DII net buying of Rs 3,908.23 crore in cash equities. Another report cited FII cash selling of Rs 2,978 crore and DII buying of Rs 2,686 crore. The figures should not be treated as directly comparable because the reports use different data bases and reporting cuts.

FMCG buying was concentrated in large index constituents including Nestle India, ITC, Tata Consumer Products and Hindustan Unilever. The available reports identify these stocks as market leaders but do not provide a fresh company-specific announcement explaining the sector’s outperformance.

Banking gains were led in part by SBI and Axis Bank. Reports attributed interest in banks to expectations of additional revenue from the proposed UPI merchant charge and to positioning around the Federal Reserve decision. Metals and auto shares also advanced, with Tata Steel among the few large metal names reported lower; no specific sector-wide catalyst was provided for the broader metals and auto moves.

The IT sector underperformed despite an expansion announcement from Infosys. That announcement concerned a new software development block at the company’s Indore centre, rather than a change to revenue or profit guidance. No consensus-versus-actual earnings comparison was available for the corporate developments identified.

The NSE’s public issue is the dominant primary-market event for the session. The offer is entirely an offer for sale of up to 12.64 crore shares by existing shareholders, so the proceeds will go to selling shareholders rather than to the exchange. The issue has a price band of Rs 1,700 to Rs 1,785 a share and is scheduled to list on the BSE on September 24, subject to the stated timetable.

Other reported corporate developments include a Rs 1,041.63-crore solar-module supply order won by Saatvik Green Energy from the Solar Energy Corporation of India; a Rs 220.66-crore order received by Highway Infrastructure from the Uttar Pradesh Expressways Industrial Development Authority; and a proposed Rs 372-crore preferential allotment by Venus Pipes and Tubes.

India Ratings and Research upgraded Motilal Oswal Financial Services and key subsidiaries to IND AA+ with a Stable Outlook from IND AA with a Positive Outlook. Blue Dart Express appointed R.S. Subramanian as managing director, effective November 30. The available material does not provide notable results due for release during the session or consensus estimates against the corporate updates.

The session’s immediate tension is between the technical rebound in Indian equities and a less supportive global rate backdrop. Domestic institutional buying has cushioned foreign selling, but the rupee’s weakness, crude near elevated levels and the Fed’s signal that tightening may continue keep the macro pressure visible.

The NSE IPO may draw institutional attention at the same time as overseas flows remain negative. Because the offer is an OFS, the issue changes the listed ownership and trading profile of the exchange but does not provide fresh capital to fund its operations. The response from qualified institutional, non-institutional and retail bidders will therefore be an important primary-market signal rather than a direct financing event for NSE.