Sensex and Nifty rise ahead of RBI's policy decision; Gains in banking and IT stocks lead rally

Benchmark equity indices climbed in early trade on Wednesday as markets anticipated the Reserve Bank of India's (RBI) monetary policy decision. Gains in banking and IT stocks fueled the positive trend.

The 30-share BSE Sensex rose by 123.45 points or 0.15%, reaching 81,758.26. Meanwhile, the NSE Nifty gained 39.65 points or 0.16%, hitting 25,052.80.

Top gainers in the Sensex pack included Tata Motors, Tech Mahindra, Bajaj Finance, Maruti Suzuki, HCL Technologies, State Bank of India, Bharti Airtel, Asian Paints, and Axis Bank. On the other hand, ITC, Nestle India, HDFC Bank, Kotak Mahindra Bank, Reliance Industries, and JSW Steel were among the laggards. Foreign Institutional Investors (FIIs) sold equities worth ₹5,729.60 crore on Tuesday, while Domestic Institutional Investors (DIIs) purchased ₹7,000.68 crore worth of shares, according to exchange data.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the recent "Sell India, Buy China" strategy pursued by FIIs seems to be waning, as indicated by reduced FII sell-offs and profit booking in Chinese stocks, particularly in Hong Kong. While FIIs have been selling due to valuation concerns, DIIs have been buying heavily, and this trend is expected to persist, according to Vijayakumar.

Market participants are closely watching the RBI’s monetary policy announcement. Despite expectations of the RBI not following the US Federal Reserve's recent 50 basis point rate cut, experts believe the central bank may shift its stance from accommodative to neutral, with food inflation remaining a concern. A rate cut is seen as unlikely.

In global markets, Asian indices were mixed, with Shanghai, Hong Kong, and Seoul trading lower, while Tokyo was in the green. Brent crude oil rose 0.32%, trading at $77.43 per barrel.

In the US, major indices closed with gains in Tuesday's session. On the previous day, the BSE Sensex surged by 584.81 points or 0.72%, closing at 81,634.81, while the Nifty gained 217.40 points or 0.88%, finishing at 25,013.15.