Sensex, Nifty Slip Ahead of RBI Rate Call

Synopsis

Indian equity indexes closed in the red on Tuesday, ending a four-session winning streak, as investors sought to take profits and grow wary in the run-up to the RBI's Monetary Policy Committee decision on Wednesday. The Sensex lost 210 points to fall 140 points from a day before to close at 23,529 and the Nifty breached the 24,650 threshold while foreign investors kept buying the stocks and analysts raised a red flag for near-term consolidation.

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A rest break during the rally

The Nifty 50 closed at 24,614.90, declining 159.40 points or 0.64 per cent, ending its four-day winning streak, while the Sensex fell 210.07 points or 0.27 per cent to settle at 78,428.96. The Sensex and the Nifty have pulled back in the four sessions prior to today, defying the bear sentiment with 2.44 per cent and 3.29 per cent rallies respectively.

The benchmarks fell as traders took profits ahead of the Reserve Bank of India's monetary policy decision, which is scheduled for Wednesday, amid the weekly expiration of Nifty 50 derivatives contracts and volatility caused by the NSE's recently launched Closing Auction Session.

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The RBI in focus

The three-day Monetary Policy Committee (MPC) meeting continued on Tuesday with the Governor, Mr Sanjay Malhotra, expected to make the decision on Wednesday, August 5. Market participants were awaiting the central bank's comments on the inflation, growth and interest-rate outlook.

Prior to the verdict, investors were also monitoring Brent crude prices, corporate earnings and coming PMI data that all have a bearing on investor sentiment over the week, while falling crude prices and improving risk sentiment helped previous session's rally.

The flows and the overall context

A steady stream of institutional buying was a more subdued but possibly not definitive indicator than a consecutive period of buying. FIIs were net buyers of Rs 922.30 crore in the cash segment on August 3, while DIIs bought a net Rs 1,571.20 crore the same day.

Looking back at the bigger picture, overseas investors were net buyers during the final week of July, with net buying of Rs 5,950 crore in the week as compared with the previous week of net selling. FII outflows had been falling since March with July seeing the lowest monthly outflows of the year of just under Rs 49,030 crore, per the research desk at Bajaj Broking

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“After seeing the record high outflows so far in 2026, the selling momentum has slowed down significantly and July was the least month for outflow in the year,” said Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking.

Stock-specific moves

There were some good signs even on a poor day on the index. Ather Energy has rallied by 14.25 per cent following a sharp decline in its net loss in Q1 FY27 to Rs 51.09 crore, with revenue climbing 88.8 per cent year-on-year to Rs 1,216.92 crore.

Great Eastern Shipping, on the other hand, has gained 2.47 per cent on higher consolidated earnings in the June quarter. On the negative side, Grasim Industries, Reliance Industries and HDFC Bank were some of the heavier opposition. This is a data-only tool that updates FII & DII activity data on the live NSE & BSE screens.

What to watch

The short-term outlook of the market is more dependent on the tone the MPC will take regarding inflation and growth than on the rate action itself, with the rate call a day away.

Any surprise print that comes following a string of solid numbers would put the spotlight back on earnings and global crude trends, while a hold would be viewed as a confirmation of the salutary — or beneficial — change in foreign flow that was observed through July.