The Indian stock markets reversed their five-day winning streak, with both the Sensex and Nifty ending the day in the red after the Reserve Bank of India (RBI) delivered its latest monetary policy statement. The Sensex closed 57 points lower at 65,120, while the Nifty settled just below the 24,700 mark, dropping by around 50 points.
The RBI’s decision to keep the repo rate unchanged at 6.50% was in line with market expectations, but the central bank’s revised projections for inflation and GDP growth contributed to market concerns. The RBI raised its inflation forecast for FY24 to 5.4%, up from the previous estimate of 5.2%, citing ongoing price pressures in food and fuel. It also revised its GDP growth projection for the year to 6.5%, up from 6.3%, reflecting improved domestic demand but also noting global risks.
The cautious stance on inflation and growth led to a shift in investor sentiment, with many adopting a wait-and-see approach. Despite some positive movement in select sectors like auto, which saw gains in stocks such as Tata Motors and Maruti Suzuki, broader market sentiment remained subdued.
Investor caution was further reflected in net selling by foreign institutional investors (FIIs), adding pressure to the indices. While the RBI's policy stance was expected to help contain inflation, the outlook for further rate cuts remains uncertain, leading to some profit-taking in the market.
As the market continues to navigate through the RBI’s policy framework, experts suggest that investors may focus on sector-specific opportunities in the coming days, particularly in resilient sectors like IT and pharmaceuticals. However, the overall market sentiment is likely to remain cautious amid concerns over inflation and global economic challenges. The Nifty’s inability to maintain levels above 24,700 indicates the ongoing volatility, with investors awaiting more clarity on future policy moves and economic trends.
