"The rupee is likely to emerge as a gainer in near term," said Bansi Madhavani of India Ratings and Research, adding that the Indian currency could consolidate in the 66.3-66.6 to a U.S. dollar range as it was better placed due to its macro-fundamentals. "As far as India is concerned, we are really well-cushioned. Inflation is coming down, fiscal deficit situation is very good, external situation is also robust. So, I think for all these reasons, impact on India would be very minimal," Madhvani added.
The sensitive index (Sensex) of the Bombay Stock Exchange closed the day's trade up 309.41 points or 1.21 percent, and the broader Nifty of the National Stock Exchange also rallied sharply to end with a gain of 93.45 points or 1.21 percent up. From the government, among the first to react on the U.S. Fed decision led by chair Janet Yellen, was Economic Affairs Secretary Shaktikanta Das. "The U.S. Fed rate hike and reference to gradualism are on expected lines," he said, referring to a marginal hike of 25 basis points in the rates from near zero levels. "India (is) well prepared. US Fed confidence on recovery is good news for our exports, especially from IT sector." The US Fed move was widely expected. The rate hike, though a small one, is being seen as a sign of how much the US economy has healed since the 2007-08 financial crisis a reason, perhaps, for the Indian equity indices to log gains for the fourth straight session. Stakeholders and ratings agencies also echoed similar views.
"The Fed's decision to raise the U.S. interest rate by 0.25 points is as anticipated. We do not expect any major impact on India. Our economic fundamentals remain strong with improved growth and twin deficits largely under control," A. Didar Singh, Ficci secretary general, said. "The rate hike also signals a stronger US economy, which bodes well for the pick-up of demand globally and hence for Indian exports of goods and services," Singh added. Even credit rating agency Fitch said India was well insulated. "India is not immune to potential general emerging market jitters related to the Fed lift-off, but it is better placed than many of its peers for a number of reasons," said Thomas Rookmaaker, director of Sovereign Ratings. According to him, firstly India's external balances have significantly improved since mid-2013, with foreign exchange reserves rising by some $65 billion to $353 billion as of November 2015, and the current account deficit narrowing. Secondly, India is less dependent than several of its peers on commodity exports, and has thus not been negatively affected by the global rout in commodity prices, he added.