Indian equities rose for a second straight session on Tuesday as private banks rallied and Brent crude eased, leaving the Nifty 50 at 22,776.10 and the BSE Sensex at 73,067.81 before the Monetary Policy Committee announces its decision at 10 a.m. Wednesday.
Bank stocks carried the tape
The Nifty Bank index advanced between 0.6 and 1.1 percent, with Axis Bank Ltd. up 1.4 percent and Kotak Mahindra Bank Ltd. surging 3.8 percent after both lenders posted strong September-quarter growth in advances and deposits. Financials have become the hinge trade for Mumbai: when oil slips and lenders print healthy books, indices recover even though broader indices had fallen for eight consecutive weeks through late September.
Sunny Agrawal, head of fundamental research at SBI Securities, told reporters that markets would look to the RBI statement for direction. An Economic Times poll of economists pointed to a 25-basis-point increase in the repo rate to 5.50 percent, which would be the first hike since February 2023.
Priced-in hike, open questions
Geojit Investments chief investment strategist V K Vijayakumar told Mint that a quarter-point move is largely discounted, with oil prices and the monsoon harvest mattering more for the next leg. Chokkalingam G, founder of Equinomics Research, echoed that view, noting crude above $100 a barrel and rainfall deficits already signal inflation risk even if the MPC pauses.
That framing matters for index positioning. The Sensex had shed about 6,590 points over the prior eight weeks, a streak longer than the COVID-19 crash window, while estimated market capitalisation on BSE slipped below ₹467 lakh crore. Tuesday’s 685-point Sensex gain recouped only a slice of that drawdown.
Sector rotation
IT and pharma names that led earlier selloffs were quieter Tuesday as traders rotated into rate-sensitive lenders that benefit from steeper yield curves when loan growth holds up. Metal miners and autos mixed as global commodity cues stayed volatile. Foreign portfolio flows data for the session were not yet available by the close, but domestic mutual fund buying through the month has helped cushion dips.
Derivatives and volatility
India VIX eased slightly into the policy, suggesting option writers expect a contained reaction if the hike matches consensus. Out-of-the-money puts on the Nifty still trade at a premium to calls, a reminder that investors remain hedged after the prolonged slide. Open interest clustered around 22,500 and 23,000 strikes for the weekly expiry.
Global cross-currents
The MPC meeting, which began Monday, follows rate increases from the U.S. Federal Reserve, the Bank of Japan, and the European Central Bank in September as major economies respond to energy-led inflation. Indian policymakers face the added wrinkle of uneven kharif rainfall and festival demand that could reaccelerate food prices.
Wednesday’s bar
Traders said Malhotra’s forward guidance on liquidity and the inflation forecast will matter as much as the headline repo change. A hawkish surprise—50 basis points—could test the recent bank rally, while a hold with a stern statement might still lift bond yields. For now, private banks have given the Nifty a pre-policy lift; the 10 a.m. statement decides whether that holds through the Diwali setup season.