Mumbai, October 7 (Daily Kiran) : The Indian stock market experienced a downturn on Wednesday, October 7, following two consecutive sessions of gains. Major benchmarks opened in the red as investors adopted a cautious stance ahead of the Reserve Bank of India’s (RBI) monetary policy committee (MPC) decision, with mixed global signals adding to the unease.
During the trading session, the Sensex fell by 462.44 points, or 0.63%, to reach 72,605.37. Meanwhile, the Nifty dropped 175.65 points, or 0.77%, settling at the 22,600 mark. The day began with the BSE Sensex at 72,965.38 and Nifty at 22,690.45, but both indices soon faced increasing pressure.
In the broader market, the Nifty midcap index slipped by 0.45%, while the Nifty smallcap index saw a slight increase of 0.1%. Among sectoral indices, Nifty Consumer Durables suffered the most, declining by 1.55%. Other sectors like Nifty Metal and Nifty Auto also recorded losses of 1.34% and over 1%, respectively. Additionally, Nifty PSU Bank fell by 0.94%, Nifty Oil and Gas by 0.82%, and both Realty and FMCG indices weakened by around 0.7%.
Conversely, the pharmaceutical and healthcare sectors showed relative strength. The Nifty Pharma index gained 0.16%, while Nifty 500 Healthcare traded positively. The Nifty Media index recorded an increase of approximately 0.74%.
Market participants are not only focused on the RBI’s policy review but are also keeping an eye on crude oil prices, foreign portfolio investors (FPI) activities, the movement of the rupee, and the RBI’s assessments of growth and inflation.
Analysts noted that the Nifty’s recovery of about 558 points from last week’s lows provided some relief to investors. However, challenges remain in sustaining this momentum. Brent crude prices have risen above $101 per barrel, and selling pressure from foreign investors shows no signs of abating.
Experts suggest that domestic liquidity and potentially strong second-quarter results are currently supporting the market. However, the primary focus today remains on the RBI’s policy stance and the message from Governor Sanjay Malhotra.
The market widely anticipates a 25 basis point (0.25%) hike in the repo rate, which is already factored into prices. Investors will pay close attention to the RBI’s outlook on future inflation and growth.
Analysts believe that the gap between interest rates in India and the U.S. has narrowed significantly. Consequently, the RBI may focus on preventing capital outflows and stabilizing the rupee, especially in light of rising U.S. bond yields and a strong dollar.
Technical analysis indicates that while short-term volatility may persist, the potential for upward movement in the market is not completely diminished. Market experts suggest that Nifty’s potential targets could be 22,930, followed by 23,100-23,220, with bullish prospects remaining if it stays above 22,574.
Asian markets witnessed mixed trading on Wednesday as investors monitored the performance of U.S. stock markets, elevated treasury yields, and geopolitical tensions. The U.S. markets closed higher on Tuesday, buoyed by stability in oil prices and easing bond yields, which provided relief to investors.
Meanwhile, crude oil prices surged again on Wednesday. The market is concerned about potential supply disruptions due to storms in U.S. production areas and Houthi attacks on Saudi Arabia, while rising oil export prices from the Middle East are offering some relief.
The next direction for the market will largely depend on the RBI’s interest rate decision, policy stance, and signals regarding inflation and growth.
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