Indian markets snapped a four-session rally on Tuesday, with the Sensex closing 210.08 points lower at 78,428.95, while the Nifty 50 settled 159.40 points down at 24,614.90.
Both benchmarks had touched sharp intraday swings, with the Sensex hitting a high of 79,143.15 before dropping to a low of 78,211.87 during the session.The pullback came largely as investors reacted to the rollout of a new Closing Auction Session mechanism for stocks with futures and options contracts, alongside broader caution ahead of the Reserve Bank of India’s policy decision, due Wednesday morning.
The RBI’s six-member Monetary Policy Committee, led by Governor Sanjay Malhotra, began its three-day review this week, with the outcome scheduled to be announced at 10 am on August 5, followed by a press conference at noon. Nearly all economists surveyed expect the central bank to hold the repo rate steady at 5.25% for a fourth consecutive meeting, as it weighs elevated crude oil prices, renewed tensions in the Middle East, and retail inflation that climbed to 4.38% in June, above the RBI’s 4% target, though still within its wider tolerance band.
Despite Tuesday’s dip, foreign institutional investors have remained net buyers of Indian equities for six straight sessions, picking up shares worth over ₹922 crore, while domestic institutional investors also stayed on the buying side. That sustained foreign interest, along with cooling global crude prices, has been a key factor supporting Indian markets in recent weeks.
Markets will now watch closely for the RBI’s tone on inflation risks and its outlook on growth, with the central bank previously projecting FY27 growth at 6.6% and inflation at 5.1%. Any shift in language, even without a rate change, could set the direction for markets in the days ahead.