By Our Business Correspondent
Indian equity markets staged a strong recovery on Monday, snapping a four-session losing streak as investors returned to risk assets amid easing concerns over aggressive monetary tightening in the United States, selective buying in large-cap stocks, and anticipation surrounding the Reserve Bank of India’s (RBI) monetary policy decision later this week. Gains in heavyweight counters such as ITC, Reliance Industries and ICICI Bank helped benchmark indices close firmly in positive territory despite continued weakness in market breadth and lingering concerns over high global bond yields and elevated crude oil prices.
The recovery came after a challenging phase for domestic equities in which benchmark indices witnessed notable declines. Market participants used the recent correction as an opportunity to accumulate quality stocks, particularly in sectors linked to domestic consumption and financial services. Investors also closely tracked developments in global markets, where softer-than-expected US employment data reduced expectations of an immediate interest rate hike by the US Federal Reserve.
The BSE Sensex climbed 472.77 points, or 0.66 percent, to close at 72,382.47, while the NSE Nifty 50 advanced 133.80 points, or 0.60 percent, settling at 22,555.75 and reclaiming the crucial 22,550 level. The rebound was significant considering that over the previous four trading sessions, the Sensex had declined 2.69 percent and the Nifty had fallen 3.11 percent amid concerns over rising global interest rates and geopolitical tensions.
Domestic Buying Supports Recovery
The day’s advance was led by strong gains in consumer-focused sectors. FMCG and consumer durable stocks attracted fresh buying as investors sought relatively defensive businesses capable of withstanding uncertain macroeconomic conditions.
Among index heavyweights, ITC emerged as one of the strongest performers, rising over 5 percent. The stock provided substantial support to benchmark indices amid expectations of resilient earnings and sustained demand in the consumer sector.
ICICI Bank gained over 1.6 percent, reflecting continued investor confidence in the banking sector’s asset quality and loan growth prospects. Reliance Industries also contributed significantly to market gains, advancing about 1.6 percent on renewed interest in energy, retail and telecom businesses.
Broader market indices registered moderate gains. The BSE MidCap Index rose 0.38 percent while the SmallCap Index added 0.31 percent, indicating that participation beyond large-cap stocks remained selective rather than broad-based.
However, market breadth remained weak despite the benchmark rally. On the National Stock Exchange, 1,844 stocks declined compared with 1,745 advancing shares, suggesting that institutional buying was concentrated in a limited set of heavyweight stocks rather than spread across the broader market.
Healthcare and pharmaceutical counters remained under pressure, reflecting sector-specific profit booking and investors’ preference for financials and consumption-oriented sectors.
RBI Policy Meeting Takes Centre Stage
Investor attention now shifts firmly to the Reserve Bank of India’s Monetary Policy Committee (MPC), which commenced its three-day meeting on Monday.
The policy review assumes particular significance as inflationary pressures remain elevated and global interest rates continue to challenge emerging market economies. Market participants are closely evaluating whether the central bank will maintain its current stance or consider a policy rate increase in response to persistent inflation concerns.
The MPC meeting, scheduled from October 5 to October 7, will assess inflation trends, economic growth dynamics, financial stability conditions and external sector developments before announcing its decision.
Financial markets are expected to remain highly sensitive to any signals from RBI Governor and MPC members regarding future interest-rate trajectories. Investors will also scrutinize inflation forecasts and economic growth projections for clues on the central bank’s assessment of the domestic economy.
Banking and financial stocks could witness increased volatility ahead of the policy announcement as traders adjust positions based on expectations regarding lending rates and liquidity conditions.
Global Environment Remains Mixed
While domestic markets rebounded, the broader global backdrop remains complex.
A key factor supporting investor sentiment was the release of weaker-than-expected employment data from the United States. The labour market report indicated that job creation slowed considerably during September, reinforcing expectations that the Federal Reserve may not need to tighten monetary policy aggressively in the near term.
The softer employment numbers provided relief to global equity markets because they suggested that inflationary pressures could moderate without requiring immediate additional interest-rate increases.
However, concerns have not disappeared entirely. US Treasury yields remain near multi-decade highs, increasing borrowing costs globally and creating challenges for both businesses and consumers.
Meanwhile, geopolitical tensions in the Middle East continue to support crude oil prices above the psychologically important $100-per-barrel mark, keeping inflation risks alive across major economies.
European markets traded higher on Monday as investors welcomed indications of easing monetary tightening pressures in the United States. Nevertheless, elevated sovereign bond yields, expensive energy prices and fiscal concerns across parts of Europe continued to temper optimism.
Asian markets also finished mostly higher despite persistent concerns regarding oil prices and US interest rates. Trading volumes remained subdued across some regional markets due to holiday-related closures in China and South Korea.
Crude Oil, Bond Yields and Currency Market in Focus
Investors continued to monitor several macroeconomic indicators that could influence future market direction.
Brent crude oil remained above $102 per barrel, trading near $102.76. Although energy prices have eased somewhat from recent peaks, they remain significantly elevated due to geopolitical developments and supply-related concerns.
For India, which imports a substantial portion of its crude oil requirements, sustained high oil prices could place pressure on inflation, the current account balance and corporate profitability.
Bond markets also attracted attention. The yield on India’s benchmark 10-year government security rose to 7.231 percent from the previous close of 7.209 percent. Rising bond yields generally indicate concerns regarding inflation and future interest rates.
In the currency market, the rupee weakened marginally against the US dollar. The domestic currency traded near 96.30 compared with its previous close of 96.25, reflecting continued strength in the dollar and cautious investor positioning ahead of major central bank decisions.
Gold prices witnessed some profit-taking. MCX gold futures for December delivery declined 0.36 percent to ₹1,49,850, as investors shifted funds toward equities following the improvement in risk appetite.
The US Dollar Index, a measure of the greenback against major global currencies, strengthened to 102.20, highlighting persistent demand for dollar assets amid global uncertainties.
US Data Alters Federal Reserve Expectations
The primary catalyst behind improving global sentiment was the latest US labour market report.
Non-farm payroll employment increased by only 29,000 jobs during September, significantly below market expectations of 90,000. The unemployment rate edged up to 4.2 percent from 4.1 percent in August, while payroll figures for July and August were revised downward by a combined 60,000 jobs.
The weaker employment data prompted investors to reassess expectations regarding Federal Reserve policy.
Market-based projections now indicate a lower probability of a rate increase at the Fed’s upcoming meeting. As a result, equities across major global markets received support from hopes that borrowing costs may stabilize sooner than previously anticipated.
Wall Street responded positively on Friday, with all three major US indices posting gains. Technology shares led the advance, benefiting from declining expectations of further monetary tightening.
Nevertheless, economists continue to caution that inflation remains above desired levels and policymakers may maintain a restrictive stance for a prolonged period even if rate hikes pause.
IPO Market Delivers Mixed Debut Performance
The primary market witnessed contrasting listing performances, reflecting increased selectivity among investors.
Orient Cables (India) emerged as the standout performer among newly listed companies. The stock closed at ₹403.30 against an issue price of ₹272, delivering a remarkable premium of more than 48 percent to investors. The strong listing highlighted sustained market interest in quality manufacturing and infrastructure-linked businesses.
In contrast, Acevector disappointed investors by closing at ₹26.10, representing a discount of over 18 percent to its issue price of ₹32. The weak performance indicated subdued appetite for companies where valuation concerns remain prominent.
German Green Steel and Power also ended below its issue price, while Runwal Enterprises concluded trading with a modest discount. The mixed outcomes underscore the growing importance of fundamentals and valuation discipline in the IPO market.
Stocks in Action
Among prominent corporate developments, PhysicsWallah surged more than 9 percent after announcing a strategic restructuring of its lending business. The company’s subsidiary, FinZ Finance, agreed to transfer a significant portion of its loan portfolio valued at ₹95.79 crore to NBFC Auxilo Finserve. Investors welcomed the move as it would reduce credit exposure and allow the education technology company to focus on its core operations.
Raymond Realty advanced over 6 percent after reporting an impressive 98 percent year-on-year jump in pre-sales to ₹902 crore during the second quarter of FY27. The robust performance signalled continued strength in the premium residential real estate segment.
Tata Motors Passenger Vehicles gained after Jaguar Land Rover reported a sharp increase in wholesales, indicating sustained demand across international markets.
Nykaa parent FSN E-Commerce Ventures climbed nearly 4.5 percent after issuing an encouraging business update. Management projected strong growth in gross merchandise value, net sales value and consolidated revenue across both beauty and fashion segments.
Mahindra & Mahindra Financial Services also attracted investor interest after reporting healthy disbursement growth and an improvement in asset quality metrics, reinforcing confidence in the rural and vehicle finance business.
IPO Subscription Update
In the ongoing primary market, Nityas Gems & Jewellery received bids worth 2.23 times the shares on offer, reflecting healthy investor participation. The public issue, priced between ₹70 and ₹75 per share, remains open until October 5.
Vishal Nirmiti also attracted satisfactory investor response, with subscription reaching 1.69 times. The issue is priced in the ₹208-220 range and closes on October 5.
Outlook
The immediate trajectory of Indian equities will largely depend on the RBI’s policy outcome, movements in crude oil prices, bond yield trends and global central bank signals. While Monday’s rebound has improved sentiment after a sharp corrective phase, investors remain cautious amid elevated geopolitical risks and inflation concerns. Market participants expect volatility to persist in the near term, though selective buying in fundamentally strong sectors such as banking, FMCG, infrastructure and consumption could provide support to the broader market.
Disclaimer: This article is only for journalistic reporting purposes. It is not investment advice. Readers are advised to consult certified financial professionals before making investment decisions.