RBI Decision Day Arrives
The Nifty 50 closed at 22,776.1 (+1.58%) and the Sensex at 73,067.81 (+1.61%), extending a second straight day of gains as markets brace for the RBI's monetary policy verdict. A CNBC-TV18 poll and multiple analyst notes point to a widely expected 25 basis point repo rate hike to 5.50%, with some reports suggesting a longer tightening cycle that could push the repo rate to 6% by FY27-end. With the hike largely priced in, attention shifts to the tone of Governor's commentary, inflation forecasts and liquidity signals rather than the headline number itself.
Banks Lead, Short Covering Helps
Bank Nifty rose 1.24% to 55,128.4 as Axis Bank, Kotak Mahindra Bank and IndusInd Bank posted strong Q2 business updates, with Kotak's net advances up nearly 25% YoY and Axis Bank's gross advances rising 22.7% YoY to Rs 13.85 lakh crore. Livemint reports FPIs have pared Bank Nifty short positions ahead of the policy outcome, a technical tailwind that could reverse quickly if the RBI commentary surprises hawkish. Kotak Mahindra Bank shares jumped 3.7% on the data, while Jefferies has added the stock to its model portfolio.
Rupee Under Renewed Pressure
The rupee slipped to 96.42-96.43 against the dollar, its weakest level in over two months, pressured by sustained foreign portfolio outflows and dollar demand from oil importers. FII selling moderated to Rs 2,961 crore on Tuesday even as DIIs bought Rs 5,089 crore, a divergence that has cushioned the equity market but not fully offset currency weakness. RBI intervention has limited losses, but traders say a rate hike may be needed to stabilize the currency further.
Reliance, Jio IPO in Spotlight
Reliance Industries shares gained 3% as the Jio Platforms IPO inches closer, with the Rs 37,700 crore issue likely to open around October 21 and complete listing before October 30, valuing Jio Platforms at roughly Rs 11 lakh crore. Jefferies has raised its weight on Reliance citing attractive valuations, while also favoring large-caps broadly over mid-caps given a narrowing earnings growth gap. The IPO proceeds are expected to go toward prepaying borrowings and general corporate purposes.
Trent, Titan Ride Festive Demand
Trent surged 10% after reporting standalone Q2 revenue of Rs 5,788 crore, a 23% YoY increase marking its second consecutive quarter of 20%-plus growth. Titan's consumer businesses grew 25% YoY with jewellery up 21% and international operations spiking 97%, though the company flagged some demand softening toward quarter-end as the festive calendar shifted later. These updates reinforce a narrative of resilient discretionary and retail consumption even amid rate-hike anxiety.
Crude Eases, Yields Climb
Brent crude near $101.72 (+1.13%) has stabilized after recent declines, offering some relief to import-dependent India even as a Houthi attack keeps traders cautious on supply risk. Meanwhile Indian government bond yields have risen, with the 6.94% 2036 benchmark climbing to 7.22%, as traders position for a hawkish RBI stance. Jefferies has flagged reduced exposure to rate-sensitive sectors given this global bond yield backdrop.
IT and Rate-Sensitives Lag
Nifty IT declined 0.60% to 28,136.05, dragging on an otherwise broad-based rally, while hospital stocks also remained under pressure per CNBC-TV18. Analysts expect real estate and autos could see volatility around the rate decision, though clean balance sheets across corporates may help cushion the impact. The World Bank's upgrade of India's FY27 growth forecast to 7.1% offers a longer-term offset to near-term rate jitters, though it flagged oil and El Niño risks.
Global Backdrop Supportive
Wall Street closed higher with the Dow at 51,521.28 (+0.49%), S&P 500 at 7,818.93 (+0.58%) and Nasdaq at 27,599.89 (+0.45%), providing a constructive global cue for Indian markets. Asian markets were mixed, with the Nikkei down 0.30% to 70,471.04 while the Hang Seng was flat at 24,280.56, suggesting investors elsewhere are also in a wait-and-watch mode ahead of central bank cues.