Indian Markets Recover as Investors Await RBI Policy Decision

The Nifty 50 index and Sensex extended a recovery on Tuesday, October 6, 2026, after the benchmark index ended a four-session losing streak on Monday. This rebound follows a 6.1% slide in September, the worst monthly performance since March. Tuesday's gains were led by private banking stocks and the MidSmall IT and Telecom sectors, while auto and pharma indices traded lower.

Market recovery is supported by softer crude oil prices and improved global cues. However, foreign institutional investors continue to be net sellers, with daily outflows averaging $677 million over the last five sessions—more than triple the 20-day average. This selling pressure is linked to US 10-year bond yields hovering around 5.3%.

Investors are now shifting focus to two major catalysts: the earnings season, which begins with Tata Consultancy Services on Thursday, and the Reserve Bank of India's Monetary Policy Committee decision on Wednesday. Analysts suggest a 25 basis point rate hike is likely due to rising inflationary expectations and global bond yields. While domestic institutional investors remain active in large-cap stocks, analysts indicate that a sustained rally will require a significant decrease in crude oil prices.