Indian benchmark indices opened lower on Thursday as investors continued to assess the Reserve Bank of India's decision to raise the repo rate by 25 basis points and shift its policy stance from neutral to calibrated tightening. The Sensex was at 72,440.59 at 9:22 am, down 198.11 points, or 0.27%, after opening at 72,668. The index touched an early high of 72,693.97, while the Nifty 50 also traded in negative territory amid pressure from the previous session's RBI-led decline.
The market sentiment was weighed down by the tighter monetary policy outlook, elevated crude oil prices and continued foreign investor selling. At the same time, information technology stocks provided some support, with TCS, HCLTech, Tech Mahindra and Infosys among the major early gainers. TCS rose 2.48%, HCLTech gained 2.11%, Tech Mahindra advanced 1.82% and Infosys climbed 1.64%. The Nifty IT index rose 1.96%, making it the strongest-performing major sector in early trade.
The gains in IT stocks came as investors turned their attention to the September-quarter corporate earnings season, with TCS scheduled to announce its quarterly results later on Thursday. Reliance Industries was also in focus but traded marginally lower, falling 0.17% in early trade after gaining strongly during the previous two sessions. Investors were also watching the company amid expectations surrounding a potential listing of Jio Platforms later this month. The Nifty Oil & Gas index, meanwhile, fell 0.49%.
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The RBI's decision to increase the repo rate and adopt a calibrated tightening stance continued to influence investor expectations. Geojit Investments Chief Investment Strategist Dr V K Vijayakumar said the new policy stance could put pressure on market valuations as higher fixed-income returns become more attractive. He also pointed to continued foreign institutional investor selling and US 10-year bond yields remaining above 5.3% as factors that could keep pressure on large-cap stocks.
Crude oil prices remained another concern for Indian equities, with Brent crude trading at $102.15 a barrel, up 1.95%, while West Texas Intermediate crude stood at $89.73, up 1.64%. Sustained high oil prices can increase inflationary pressure and affect the rupee and corporate margins. The broader market also remained weak, with the Nifty 100 falling 0.38%, Nifty 200 declining 0.42% and Nifty 500 losing 0.44%. The Nifty Midcap 50 dropped 0.80%, while the Midcap 100 and Smallcap 100 declined 0.58% and 0.55%, respectively.
Most major stocks were in the red, with Bajaj Finance down 1.51%, ITC falling 1.62%, BEL declining 1.21%, Adani Ports losing 1.21% and Tata Steel slipping 1.17%. Realty, metals and financial services ex-bank stocks also faced selling pressure. Vijayakumar said sustained foreign selling in large-cap stocks had contributed to a preference for growth stocks despite high valuations, while value stocks had remained relatively subdued. He added that a sustained market reversal would require foreign investors to turn buyers, while rising rates could also make fixed-income investments more attractive.
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