Stock market crash today: Sensex plunges 995 points, Nifty sheds 1% ahead of Fed decision: Here's what spooked D-Street

The BSE Sensex fell about 995 points and the NSE Nifty 50 shed roughly 1% in a session that preceded the US Federal Reserve's policy decision, with the sell-off attributed to pre-announcement caution among Indian equity investors. The transmission channel runs through global risk appetite and rate expectations: ahead of a Fed decision, traders reduce exposure to emerging-market equities because any hawkish surprise tends to lift US yields and strengthen the dollar, tightening financial conditions for dollar-funded and foreign-portfolio flows into India. Indian large caps, which carry high foreign institutional ownership, are the most sensitive to such capital reallocation, while the dollar index and the S&P 500 act as the reference points for how global positioning is shifting into the decision. The next concrete catalyst is the Fed's policy statement and the chair's press conference, where traders will parse the rate outlook and any guidance on the pace of balance-sheet and rate adjustments for signals on dollar direction and US equity valuations.

The US Dollar (USD) is the world's primary reserve currency and the base for most forex majors. Headlines about Federal Reserve policy, US macro data (CPI, NFP, GDP), and Treasury yield shifts typically drive USD pair direction within seconds of release.

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