Mumbai (Maharashtra) [India], October 7 (ANI): The domestic equity markets opened under pressure on Wednesday as investors turned cautious ahead of the Reserve Bank of India’s Monetary Policy Committee (MPC) decision and awaited the central bank’s view on the emerging growth-inflation dynamics.
The Nifty 50 index opened at 22,690.45, down 85.65 points or 0.38 per cent, while the BSE Sensex opened at 72,965.38, lower by 102.43 points or 0.14 per cent. Soon after opening, both indices fell further.
Banking and market expert Ajay Bagga said the MPC meeting is taking place against the backdrop of a significant shift in macroeconomic conditions.
“The Monetary Policy Committee (MPC) meets today against the backdrop of a significant shift in macro tailwinds,” Bagga told ANI.
He said the RBI has cut the repo rate by a cumulative 125 bps across 2025 to a trough of 5.25 per cent and has kept it unchanged for four consecutive policy reviews. The central bank is now facing a growth-inflation trade-off, he said.
Bagga said a 25 bps rate hike would be the first hike since February 2023. He added that the August MPC minutes had indicated that some members were open to higher rates if inflation broadened.
He pointed to several factors putting pressure on the economy, including CPI inflation rising to 4.82 per cent in August, above the 4 per cent target for a third straight month, while WPI inflation reached 9.92 per cent.
Crude oil is also back above USD 100 per barrel, while the Fed has begun tightening and the rupee is down about 6 per cent this year, he said. The Fed hiked in September to 3.75-4 per cent, while the Bank of Japan has also hiked rates.
Among sectoral indices on the NSE, the Nifty Media index was the only major sector to open in the green, gaining 0.66 per cent. All other sectors opened in the red.
The Nifty Auto index declined 0.52 per cent, Nifty FMCG fell 0.43 per cent, Nifty IT declined 0.51 per cent, Nifty Metal lost 0.59 per cent, Nifty Pharma fell 0.12 per cent, Nifty PSU Bank declined 0.29 per cent, Nifty Private Bank fell 0.29 per cent, and Nifty Oil and Gas declined 0.49 per cent.
Among Nifty 50 stocks, Dr Reddy, Cipla, Bharti Airtel and Coal India were among the top gainers in the opening session. Titan, SBI Life, Asian Paints, M&M and IndiGo were among the top losers.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the recent market rally has provided some relief to investors but could face challenges.
“The 558-point rally in the Nifty from last Thursday’s low level has come as a relief for investors. But this rally will face headwinds, constraining a sustained up move,” Vijayakumar told ANI.
He said Brent crude is back above USD 101 and there are no signs of a reversal in FPI outflows. At the same time, domestic liquidity and expectations of good Q2 numbers are supporting the market.
“The focus of the market attention today will be on the monetary stance and the message from the RBI Governor,” he said.
Brent crude oil was trading at USD 101.51 per barrel, up more than 1 per cent on Wednesday. Gold prices moderated 0.31 per cent to Rs 1,49,660 per 10 grams for 24 karats, while silver prices declined 0.49 per cent to Rs 2,26,135 per kg at the time of reporting.
In other Asian markets, Japan’s Nikkei 225 declined 0.57 per cent to 70,295, Singapore’s Straits Times fell 0.07 per cent to 5,624, Hong Kong’s Hang Seng declined 0.66 per cent to 24,121, Taiwan’s Weighted Index fell 0.27 per cent to 49,689 and South Korea’s KOSPI declined 0.83 per cent to 6,882. (ANI)
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