Markets Volatile As RBI MPC Continues, Sensex Closes Below 80,400, Nifty Marginally Down
On Friday, FIIs offloaded equities worth Rs 5,687.58 crore and according to market experts, sustained outflows exerted pressure on domestic equities and the rupee.
- Indian stock indices reversed early gains, closing lower on Monday.
- Selling by foreign investors and trade talk uncertainty impacted sentiment.
- Market direction hinges on FII flows and US-India trade relations.
The benchmark equity indices gave up early gains and turned volatile in the afternoon session on Monday. During the closing bell, the BSE Sensex closed 80,400, slipping more than 50 points, while the Nifty50 index settled the session at 24,635, marginally low by 20 points. The investors also remained on edge ahead of the Reserve Bank of India’s policy outcome on Wednesday.
Notably, both benchmarks opened today's session in green. The Sensex rose 408.12 points or 0.51 percent to 80,834.58 in early trade, but retreated to 80,339.23 by 12:30 PM. The broader Nifty, which advanced 131 points or 0.53 percent to 24,785.70, was trading at 24,643.50 around the same time.
Among the top gainers on the 30-share BSE Sensex were Titan, State Bank of India, NTPC, Trent, Eternal, while the laggards included shares of firms like Tata Motors, Reliance, Hindustan Unilever and TCS.
In the broader markets, the Nifty Midcap 50 stood out as it gained 0.29 per cent. Sectorally, Nifty PSY Bank index rallied 1.78 per cent and the Nifty Media index bled 0.85 per cent.
Market Uncertainty And RBI MPC
Among the key factors which led to the reversal of the market was persistent selling by Foreign Institutional Investors (FIIs) which weighed heavily on sentiment. On Friday, FIIs offloaded equities worth Rs 5,687.58 crore and according to market experts, sustained outflows exerted pressure on domestic equities and the rupee.
Additionally, uncertainty about the RBI MPC's decision on repo rate cut, to be revealed on October 1, made investors more cautious. While the central bank is widely expected to hold its key repo rate at 5.50 percent, some economists have not ruled out a surprise cut in view of global trade tensions and soft inflation.
According to a Reuters poll, three fourths of economists see a pause, but major banks like Citi, Barclays, Capital Economics and SBI have flagged the possibility of a rate reduction. Further, there is still no clarity between India-US trade talks as concerns over trade discussions between India and the United States have also dampened investor sentiment.
According to Santosh Meena, Head of Research at Swastika Investmart, “At this point, all eyes are on US–India trade relations for a possible relief rally." US economic data, movements in the dollar index, and crude oil price trends will also guide market sentiment this week. Foreign institutional investor (FII) flows, which have been negative of late, are expected to remain the most crucial determinant for market direction in the coming days.
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