IMPACT OF US MONETARY POLICY ON INDIA'S SENSEX

Interest rates have a significant impact on the cost of borrowing, investment choices, and total profitability, making them an effective economic instrument. Understanding the effects of interest rate fluctuations is crucial for businesses operating in the changing Indian market, in which the Sensex serves as a benchmark index. By shedding light on how these businesses react to and are affected by interest rate fluctuations, this study hopes to improve our understanding of their financial stability and strategic decision-making. This study fills the evidence gap that gives clear picture on how the fall in Federal Reserve interest rate through the period of 4 years has strong impact on profitability of the companies of Sensex. Additionally, the study will assist in spotting possible trends and patterns in the correlation between interest rates and financial performance, offering insightful information to corporate executives, legislators, and investors. We aim to determine the degree to which changes in interest rates impact the financial well-being of these well-known Indian companies by closely analysing three important financial ratios: the fin cost to sales ratio, the debt-to-equity ratio, and the net debt to PBITA ratio, across the period of 2021–2024. The study's approach includes gathering and examining secondary data from the balance sheets, financial statements, and profit and loss accounts of 30 Sensex firms for the timeframe of 2021–2024. We may obtain a thorough grasp of each company's financial health and leverage by computing the previously stated financial ratios. Following that, statistical techniques will be applied to analyse the correlation between different ratios for the above stated time period. Significant inflation has impacted strength and direction of the correlation. The results of this study shows that interest rate fluctuations have a major effect on the Sensex firms' financial performance. Decreased borrowing costs due to cut down interest rates are likely to have an impact on financial ratios and profitability. Businesses that have more debt may be more susceptible to the impacts of changes in interest rates KEYWORDS: Federal Reserve Interest Rate, Financial Ratios, Sensex, Profitability, Indian Economy.