Benchmark indices Nifty 50 and Sensex slipped into the red following the Reserve Bank of India's decision to keep the key lending rate unchanged on Wednesday, August 6.
At 10:10 a.m., the Sensex was down 93.44 points or 0.12 percent at 80,616.81, and the Nifty was down 53.95 points or 0.22 percent at 24,595.60. About 1083 shares advanced, 2049 shares declined, and 131 shares unchanged.
The broader markets were in the red, with the Nifty Midcap 100 and Nifty Smallcap 100 slipping 0.8 percent each. Sectoral indices showed a mixed sectoral trend in early trade. Nifty Pharma led the losers, slipping over 1 percent, followed by declines in IT, Realty, and Energy indices. FMCG and Auto were marginally lower.
The Nifty Pharma index came under selling pressure as U.S. President Donald Trump announced that he would levy imports on pharmaceutical products soon, with tariffs ranging up to 250 percent.
On the positive side, Nifty Infra and Media rose 0.38 percent each, while Metal and PSU Bank indices posted modest gains. Broader sentiment remained cautious with selective buying seen in defensives and infrastructure-related stocks.
Further, the U.S. President Donald Trump has reiterated his decision to impose a “substantial” increase in tariffs on Indian imports within 24 hours, accusing India of taking advantage of the Russia-Ukraine conflict by reselling Russian oil for profit.
RBI policy decision
The Reserve Bank of India's Monetary Policy Committee announced its decision for the August meeting keeping the repo rate unchanged at 5.5 percent, against the backdrop of surging global trade tensions, cooling inflation, and currency pressures.
Analysts expected that the central bank will undertake a 'dovish pause', with many expecting a downwards revision to the consumer price inflation (CPI) estimates for FY2026.
Over the past three MPC meetings, the RBI has trimmed the benchmark lending rate by 100 basis points, while the policy stance stands at 'neutral.' After front-loading the cuts for the current fiscal year, most experts are pencilling a pause.
Global markets
US stocks ended lower on Tuesday as investors weighed the impact of tariffs after companies cited trade duties in their results or outlooks. The Dow Jones Industrial Average fell 0.14 percent, the S&P 500 lost 0.49 perent, and the Nasdaq Composite lost 0.65 percent.
Asian stocks struggled for direction at the open after weakening US services data fueled uncertainty about the Federal Reserve’s policy path.
Institutional flows
On August 5, Foreign Portfolio Investors (FPIs) were net sellers to the tune of Rs 22 crore worth of shares in Indian equities, while domestic institutional investors (DIIs) net bought Rs 3,840 crore worth of shares, according to provisional NSE data.
Technical levels
Technically, the index is placed at a crucial make-or-break juncture. "The 24,500 zone has acted as a strong support area since May and also coincides around the 89-day EMA, making it a key level to watch. A decisive breach below this support may open the doors for further downside towards the bullish gap around 24,200, which aligns with the 200DSMA. On the flip side, for bullish momentum to resume, a breakout above Friday’s high of 24,800 is essential," according to Rajesh Bhosale, Equity Technical Analyst, Angel One.
Derivative outlook
The F&O data reflects a defensive and cautious undertone. Significant call writing has emerged at the 25,000 strike, where open interest has surged to 1.33 crore contracts, reinforcing a stiff resistance zone.
"On the other hand, the highest put open interest is observed at the 24,600 strike, with 97.30 lakh contracts, positioning it as the immediate support. Interestingly, put writers have started shifting to lower strikes, indicating weakening bullish conviction," said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.
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