Sensex, Nifty Slip Ahead Of RBI Policy; West Asia Tensions Weigh

Indian equity benchmarks opened lower on Thursday as investors remained cautious ahead of the Reserve Bank of India's monetary policy decision, while persistent geopolitical tensions in West Asia and continued foreign institutional investor (FII) selling weighed on market sentiment.

At 9:30 a.m., the BSE Sensex was down 248.23 points, or 0.33%, at 74,097.94, while the NSE Nifty50 declined 87.30 points, or 0.37%, to 23,318.30.

The subdued opening followed weak global cues and lingering concerns over the conflict involving the US and Iran, which has kept energy prices elevated and raised worries over global trade disruptions. Investors are also awaiting the RBI's policy announcement for guidance on interest rates, inflation, liquidity conditions and the broader economic outlook.

Foreign investors have remained aggressive sellers in Indian equities this year, with cumulative outflows crossing ₹2.5 lakh crore in 2026. While domestic institutional investors have continued to provide support, sustained overseas selling has limited market upside.

The rupee opened marginally higher at 95.71 against the US dollar compared with its previous close of 95.70. However, the currency continues to face pressure from elevated crude oil prices and persistent foreign fund outflows.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said near-term risks continue to outweigh positive triggers for the market.

"In the near-term, headwinds are stronger for the market than tailwinds. The continuing uncertainty in West Asia and the big and sustained FPI selling are the strong headwinds which are weighing on the market. In the absence of any resolution of the West Asia crisis, there is no scope for a healthy rally in the market," he said.

According to Vijayakumar, the bullish momentum in markets such as the US, Japan, South Korea and Taiwan is attracting global capital, resulting in continued foreign investor selling in India. He also noted that aggressive short positions held by FPIs in the derivatives segment indicate the possibility of further downside unless there is a meaningful decline in crude prices following a resolution of the West Asia conflict.

Rajesh Exports Under Pressure

Among individual stocks, Rajesh Exports hit the 5% lower circuit after the Securities and Exchange Board of India (SEBI) issued an interim order alleging large-scale financial misrepresentation and diversion of funds by the company and its promoter.

The regulator alleged that the jewellery exporter overstated its business scale through overseas subsidiaries, with the alleged revenue misrepresentation amounting to nearly $158.3 billion or ₹15.15 lakh crore. SEBI noted that between 97% and 99% of the company's consolidated revenue was attributed to foreign subsidiaries, particularly Switzerland-based Valcambi SA.

The development triggered heavy selling in the stock and kept it under pressure in early trade.

Focus On RBI Policy

Market participants are expected to remain cautious through the session as they await the RBI's policy outcome. Apart from interest rate guidance, investors will closely track the central bank's commentary on inflation, growth prospects, liquidity management and the impact of elevated energy prices on the economy.

Vijayakumar advised investors to avoid aggressive trading amid heightened uncertainty and focus instead on quality businesses that may have come under pressure due to broad market weakness.

"Trading in this volatile market amidst huge uncertainty would be extremely risky. The ideal strategy in this situation is to wait and watch. Meanwhile market weakness will offer buying opportunities in high-quality stocks under temporary pressure from FPI selling," he said.

He added that select segments such as private banks, pharmaceuticals, automobiles and auto ancillary companies continue to offer attractive long-term opportunities despite near-term volatility.