The US Federal Reserve meets on October 27–28, and Indian investors should watch it closely. A hold or a hike will move your IT stocks and the rupee — probably within hours.
September’s US inflation print came in hot at 3.7%, driven by fuel and the Middle East war. Now markets are pricing in a real chance of a rate hike in December.
Updated: October 16, 2026, 10:45 IST
Quick Read
- The decision: The FOMC meets October 27–28. Traders see a ~71.8% chance the Fed holds this month, but ~69% chance of a hike in December (CME data, Oct 15).
- The trigger: September US inflation rose to 3.7% on fuel costs tied to the Middle East war, per the Korea Times.
- The damage so far: October 14’s hot print hammered AI stocks — CoreWeave fell 16%, Oracle 9%, Dell 11%, wiping about $80 billion off, per ET’s US-market live blog. In India, foreign investors sold ₹5,285 crore of Indian shares on October 15.
Why a US rate decision moves Indian stocks
Think of it this way. When the Fed raises rates, US bonds pay more. Global money then prefers safe US bonds over risky Indian shares. Foreign investors pull money out of India, Indian stocks fall, and the rupee weakens because dollars leave the country.
We’ve already seen the trailer. On October 14, the hot inflation print hit AI stocks hard — CoreWeave down 16%, Oracle down 9%, Dell down 11. Indian IT shares track the same mood because their biggest customers are American companies. If US clients get nervous about costs, Indian IT contracts are the first thing that feels the chill.
Also read: 350-point Sensex rebound: why Dalal Street rose as Asia crashed
The rupee and your portfolio
The rupee is trading near 97 to the dollar — weak. Bond yields are at multi-year highs. And the Nifty is staring at a ninth straight weekly decline, Outlook Money noted earlier this month.
Foreign investors sold ₹5,285 crore of Indian shares on October 15 alone. If the Fed signals a December hike on October 28, that selling could speed up. That means more pressure on the Nifty and a weaker rupee.
A weak rupee cuts two ways. It makes Indian IT exports cheaper for foreign buyers — good for TCS, Infosys, Tech Mahindra. But it makes imports (including oil, which is already near $106 a barrel) costlier — bad for everyone else, and it pushes up inflation here.
Also read: Sensex down 61 pts, Nifty dips below 22,700; gold steady
The silver lining nobody’s quoting
Here’s a counterpoint from inside the industry. On October 15, Tech Mahindra’s CEO addressed US visa worries and said only about 1% of the company’s workforce is on H-1B visas — and 70% of its US staff are hired locally, The Hindu reported.
That matters because one fear around Indian IT is US visa crackdowns hurting margins. If the big firms are already local-heavy in the US, that fear is smaller than the market thinks. Tech Mahindra’s own Q2 numbers back it up: net profit jumped 32.7% to ₹1,585.6 crore, revenue rose 15.6%, and the board declared a ₹15-per-share interim dividend.
So the picture isn’t one-sided. Rate worries are real and the FII outflow is real. But Indian IT’s business — and its US staffing reality — is stronger than the panic suggests.
FAQ
When is the Fed’s next decision?
The Federal Open Market Committee meets October 27–28. Markets expect a hold this month, with a hike more likely in December.
How does a Fed hike hurt Indian IT stocks?
Higher US rates pull global money into US bonds and out of Indian shares. Foreign investors sell, the Nifty falls, and IT stocks — which depend on US clients — take a direct hit.
Should I change my investments before October 28?
This article isn’t investment advice — talk to a professional. But knowing the date and the mechanics helps you read the market’s moves instead of panicking at them.
Also read: 1,000 Netflix jobs cut (6%): biggest layoff since 2022
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