Benchmark stock market indices concluded the trading session with significant losses, as volatility gripped Dalal Street, with investors showing caution ahead of the crucial Reserve Bank of India's (RBI) monetary policy decision. The session was marked by uncertainty, as market participants awaited clarity on whether the Monetary Policy Committee (MPC) would decide to reduce the repo rate by 25 basis points (bps), as many analysts are expecting. The rate cut is seen as a potential tool to revive the economy amidst several macroeconomic pressures, but there remains ambiguity regarding the extent of the cut and its potential long-term impacts.
At the close of the session, the S&P BSE Sensex recorded a loss of 213.12 points, ending at 78,058.16, while the NSE Nifty50 saw a decline of 92.95 points, closing at 23,603.35. The negative market sentiment was evident as both the benchmark indices continued to fall throughout the trading day, reflecting broader market concerns. This decline came despite a brief period of optimism at the start of the session, which was quickly overshadowed by profit-booking and risk aversion among investors as the RBI policy announcement loomed large on the horizon.
Sector-wise, the broader market indices saw considerable pressure, with Nifty FMCG and Nifty Realty indices witnessing some of the steepest falls. These rate-sensitive sectors were particularly hit as investors became cautious about the potential impact of rate cuts or monetary tightening on consumer demand and business growth. The real estate sector, which is often deeply influenced by interest rates, showed weakness, and there was a noticeable retreat from stocks in banking and auto sectors as well.
On the flip side, some stocks in the IT and Pharma sectors showed resilience, helping to mitigate broader market losses. Among the top gainers on the Nifty50 were ITC Hotels, Cipla, Adani Ports, HDFC Life, and Dr Reddy's, which performed well despite the overall market weakness. These stocks benefited from defensive characteristics that shielded them somewhat from the broader downturn.
However, the top losers included Trent, Bharat Electronics Limited (BEL), Bharti Airtel, Titan, and ONGC, all of which struggled during the session. These declines reflected growing caution about potential rate hikes or other economic factors that could impact their future profitability. Trent, for example, faced challenges in light of the uncertain macroeconomic outlook, while Airtel and Titan saw pressure due to weaker sentiment in the telecom and consumer goods sectors, respectively.
Prashanth Tapse, Senior Vice President at Mehta Equities Ltd, commented on the trading session, stating that although the market had shown strong gains in the early morning, the sentiment quickly reversed as investors focused on booking profits in sectors that are vulnerable to monetary policy changes. According to Tapse, the market stayed in a narrow range for much of the day, showing a negative bias as traders awaited the RBI’s move. He emphasized that if the central bank surprises the market with a larger-than-expected rate cut, there could be a short-term uptick in market sentiment, though the overall trajectory would depend on broader economic developments.
Vinod Nair, Head of Research at Geojit Financial Services, echoed similar sentiments, pointing to the market's moderate decline as investors remained cautious in anticipation of the RBI policy decision and amid continuing concerns over the trade war between global powers. Nair noted that despite the government's focus on boosting consumption and supporting growth, broader market sentiment remained somewhat subdued. He highlighted that the IT and Pharma sectors showed some promise, thanks to lower treasury yields and moderating US PMI data, which raised hopes that the Federal Reserve might be more inclined to lower interest rates in the future, potentially bringing some relief to global markets.
With global uncertainty lingering over trade tensions, inflation concerns, and policy changes, market participants are likely to remain on edge, keeping a close watch on RBI’s monetary policy and macroeconomic indicators. If the RBI decides to proceed with a rate cut, it could temporarily relieve some of the pressure on interest-sensitive sectors like real estate, banking, and automobiles. However, there is also a significant amount of caution due to the inflationary concerns and the potential impact on the Indian rupee.
Investors’ focus will likely shift to the government's measures for managing the economic slowdown and boosting demand in the coming months. The outcome of the monetary policy review, coupled with developments on the global trade front, will be pivotal in determining the trajectory of the Indian equity market in the near future.
In conclusion, the Indian stock market is entering a period of consolidation, with participants awaiting monetary policy announcements and global economic developments that could provide clarity on future market direction. If the RBI delivers a rate cut, it could provide short-term optimism, but the broader risks posed by inflation and global trade tensions remain crucial factors in shaping the future market landscape.
