Flooring Guide by Cinvex – , JAKARTA – The robust rally of the Jakarta Composite Index (IHSG) preceding The Federal Reserve’s pivotal interest rate announcement is poised to potentially trigger a significant “sell on news” phenomenon. This market dynamic is particularly anticipated to impact Indonesia’s major banking, property, and consumer sectors.
On Monday, September 15, 2025, the composite index closed with a commendable gain of 1.06%, reaching the 7,937.11 level. This upward movement was notably bolstered by a substantial inflow of foreign funds amounting to Rp1.05 trillion. Year-to-date, the IHSG has appreciated by an impressive 12.11%, cementing its position as one of Southeast Asia’s top-performing stock exchanges.
However, the upward momentum showed signs of wavering today, Tuesday, September 16, 2025. As of 2:22 PM WIB, the IHSG recorded a slight dip of 0.04%, trading at 7,933.9, indicating a cautious sentiment among investors.
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According to capital market observer, Reydi Octa, the IHSG’s rally has already reached a considerable height leading up to The Fed’s Federal Open Market Committee (FOMC) meeting scheduled for September 17, 2025. Despite the recent strengthening being supported by foreign capital inflows, Octa warns that the risk of profit-taking after the interest rate announcement remains substantial.
“The risk of a ‘sell on news’ event is quite real for short-term traders who aim to capitalize on the volatility generated by both Bank Indonesia’s and The Fed’s interest rate announcements,” Reydi Octa explained to Bisnis on Tuesday, September 16, 2025.
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Furthermore, Octa noted that the influx of foreign funds into the domestic stock market cannot yet be characterized as strong or sustained. While investors have recorded daily net buys, cumulatively year-to-date, there has still been a significant net sell-off totaling Rp60.7 trillion.
“This suggests that foreign capital entry is not yet structured and massive, but rather tactical or incremental, as the IHSG might not yet be the primary destination for global fund flows,” Reydi elaborated, highlighting the discerning nature of current foreign investment.
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Amidst these projections, Octa identifies stocks in the big banks, property, and consumer sectors as the most vulnerable to correction. This vulnerability stems from aggressive profit-taking, particularly if these sectors have seen significant gains driven by expectations of future interest rate cuts. Should the actual rate decision not align with these expectations, a wave of profit-taking could potentially sweep across these three key sectors.
Adding to the market sentiment, Nafan Aji Gusta, Senior Market Chartist at Mirae Asset Sekuritas, emphasized that the market eagerly anticipates The Fed’s interest rate decision. The consensus widely expects a 25 basis point (bps) reduction, bringing the rate down to 4.25%, alongside the release of the FOMC’s latest economic projections.
“This anticipation is particularly heightened as it unfolds against a backdrop of a declining labor market and persistent inflationary pressures,” Nafan stated in a daily research publication, underscoring the complex economic environment.
On the domestic front, market participants will closely monitor Bank Indonesia’s (BI) benchmark interest rate announcement. The majority consensus projects the BI Rate will be maintained at 5%. Alongside this, a comprehensive 8+4+5 economic stimulus package has been introduced, designed to accelerate the implementation of various development programs across Indonesia.
“These domestic initiatives are certainly expected to provide a fresh impetus for the national economy, injecting positive momentum into the local market,” Nafan concluded, offering an optimistic outlook for Indonesia’s economic landscape.
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Summary
The Jakarta Composite Index (IHSG) has shown a strong rally, closing at 7,937.11 with significant foreign inflows, making it one of Southeast Asia’s top performers year-to-date. However, capital market observer Reydi Octa warns of a potential “sell on news” event and substantial profit-taking following The Federal Reserve’s interest rate announcement on September 17, 2025, especially since recent foreign capital inflows are considered tactical rather than sustained.
Stocks in the big banks, property, and consumer sectors are identified as most vulnerable to correction if expected interest rate cuts do not materialize. The market widely anticipates The Fed to reduce rates by 25 basis points to 4.25%. On the domestic front, Bank Indonesia is expected to maintain its benchmark interest rate at 5%, with an economic stimulus package poised to provide fresh impetus to the national economy.