Wells Fargo no longer expects Fed rate cuts in 2026 as Iran war drags on

US interest rate policy heavily influences global capital flows and emerging markets like India. Higher rates can make Indian assets less attractive.

Negative for rate-sensitive sectors (e.g., real estate, auto, capital goods) and companies with significant foreign currency debt. Positive for export-oriented IT companies due to stronger dollar.

For Indian markets, this story mainly matters for the macro pocket. The current signal is bearish, so traders should watch whether the effect spreads across the sector or stays limited to a single name.

Watch whether the market validates this read through price action, volume, and breadth. If the headline matters, the signal should show up in execution, not just in commentary.

• •Wells Fargo Investment Institute no longer expects US Federal Reserve to cut interest rates in 2026.
• •Cites uncertainty around inflation and heightened geopolitical risks tied to the Middle East war.
• •Risk flag: Increased FII selling pressure
• •Risk flag: INR depreciation
• •Risk flag: Higher domestic borrowing costs