D-Street Cautiously Optimistic Ahead Of MPC's Rate Decision, Sensex Opens Above 80,600
The RBI's six-member Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, will announce its interest rate decision on Wednesday.
Indian stock market looked set for another day of heavy volatility on Tuesday. The BSE Sensex rang the opening bell near above 80,600, rallying over 250 points, while the NSE Nifty50 started the session beyond the 24,700 mark, surging 64 points, around 9:15 AM.
Notably, the GIFT Nifty traded marginally higher to cross 24,700, around 8:52 AM today, giving signals of a muted day ahead. However, in the pre-open session, the Sensex jumped more than 200 points to inch closer to 80,600, and the Nifty rose 55 points to touch 24,690, both around 9:06 AM.
On the 30-share Sensex, Titan, PowerGrid, Asian Paint, BEL, and Tata Steel stood among the early gainers. On the other hand, the laggards included Tata Motors, Reliance, Bharti Airtel, ITC, and Tech M.
In the broader markets, the Nifty Bank index stood out with gains of 0.43 per cent. Sectorally, the Metal index dominated in green and climbed 0.79 per cent. Meanwhile, the Media index slipped 0.62 per cent.
RBI MPC To Drive Sentiment
The RBI's six-member Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, will announce its interest rate decision on Wednesday. The outcome comes at a time of heightened geopolitical uncertainty and following the US move to impose 50 per cent tariffs on Indian exports.
Earlier this year, the central bank lowered the repo rate by 100 basis points in three separate cuts, starting February, to counter slowing inflation measured by the consumer price index (CPI). However, in its August policy review, the RBI opted to maintain the status quo, preferring to gauge the impact of global headwinds, including US tariffs, on India’s growth and inflation dynamics.
Analysts are now divided over whether the RBI will extend its easing cycle this month. A report by Goldman Sachs anticipates the MPC will leave the policy repo rate unchanged at 5.50 per cent in the October meeting, while retaining its neutral stance. The investment bank expects the RBI to signal a dovish tone, citing the need to assess growth conditions and allow time for the transmission of earlier rate reductions.
Goldman Sachs’ baseline forecast projects another 25-basis-point cut in December, which would bring the repo rate down to 5.25 per cent. The outlook rests on a combination of factors, including a benign inflation trajectory, expectations of a softer policy path from the US Federal Reserve, and forecasts of renewed weakness in the US dollar.
The report also highlighted a risk scenario under which the RBI could act earlier than December. Should the MPC assess that trade-policy uncertainties are exerting stronger downside risks on growth, or that the impact of recent GST rate cuts on inflation is larger than expected, the central bank might opt for a 25-basis-point cut as early as October.
How Did Markets Fare So Far?
Both benchmarks marked their seventh consecutive session of decline on Monday as investors exhibited caution ahead of the Reserve Bank of India’s upcoming interest rate decision. The weak sentiment was compounded by continued foreign fund outflows and selling pressure in banking counters. The Sensex oscillated between highs and lows through the day before closing 61.52 points down, or 0.08 per cent, at 80,364.94. Similarly, the NSE Nifty slipped 19.80 points, or 0.08 per cent, to finish at 24,634.90. The index has now lost over 3 per cent across seven consecutive sessions.
The sustained sell-off has weighed heavily on benchmarks, in the last seven trading sessions, the Sensex has dropped 2,649.02 points, or 3.19 per cent, while the Nifty has shed 788.7 points, or 3.10 per cent.
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