Mumbai, Oct 8: Indian equity markets opened on a cautious note on Thursday, with the benchmark indices trading around the flat line as investors weighed the impact of the Reserve Bank of India’s (RBI) rate hike, continued foreign fund outflows and mixed global cues.
The GIFT Nifty was trading at 22,620 around 8:05 am, up 28 points or 0.12 per cent, indicating a mildly positive start for the domestic market. However, the early gains remained limited as investors continued to assess the implications of tighter monetary policy and rising global borrowing costs.
The cautious opening follows a weak session on Wednesday, when Indian equities snapped their two-day winning streak. The Sensex declined 429.11 points, or 0.59 per cent, to close at 72,638.70, while the Nifty fell 173.05 points, or 0.76 per cent, to 22,603.05.
Foreign investor activity remained a major concern. Foreign institutional investors (FIIs) sold Indian equities worth more than Rs 6,100 crore on Wednesday, reflecting continued caution among overseas investors. Domestic institutional investors (DIIs), however, provided some support by purchasing shares worth around Rs 4,500 crore.
RBI rate hike keeps investors cautious
Market sentiment has remained under pressure following the RBI’s decision to raise the repo rate by 25 basis points to 5.50 per cent and move towards a “calibrated tightening” stance.
The rate increase, the first since February 2023, has raised concerns over higher borrowing costs and its potential impact on consumption, corporate financing and earnings, particularly across interest-rate-sensitive sectors.
Banking and financial stocks are therefore likely to remain in focus, with investors assessing how tighter monetary conditions and the RBI’s regulatory measures could affect the sector.
Crude oil, US yields add to pressure
Global factors are also expected to influence trading during the session. Rising crude oil prices, elevated US Treasury yields and weakness in Asian markets have kept risk appetite subdued.
Higher crude prices are a particular concern for India because the country remains heavily dependent on oil imports. A sustained rise in energy costs could put pressure on inflation, the rupee and corporate margins.
The Indian currency and foreign fund flows will also remain closely watched, as higher US yields can make emerging-market assets relatively less attractive to global investors.
GST developments in focus
Apart from global cues and monetary policy, investors are also expected to track GST Council-related developments and other domestic economic indicators for signs of how policy decisions could influence consumption, businesses and government revenues.
With strong domestic institutional buying providing some cushion, the market may see selective buying in sectors with stronger earnings visibility. However, persistent FII selling and global uncertainties could keep volatility elevated.
For the near term, investors are likely to remain focused on RBI policy, crude oil prices, US bond yields, rupee movement and institutional fund flows. The ability of the Nifty to hold the 22,600 zone could also remain important for market sentiment as trading progresses.
Overall, the Indian market is likely to begin Thursday’s session with a cautious bias, with investors balancing domestic economic resilience against tighter monetary policy and a challenging global backdrop.