Sensex Falls for Second Straight Session: Market Awaits RBI Policy Decision

Indian stock market benchmarks Sensex and Nifty 50 extend losses as investors tread cautiously ahead of the RBI’s monetary policy announcement.

February 6, 2025: Sensex and Nifty Extend Losses Amid RBI Policy Speculation and Weak Market Sentiments

The Indian stock market continued its downward trend for the second consecutive session on February 6, as the Sensex fell 213 points to close at 78,058.16, while the Nifty 50 dropped 93 points to settle at 23,603.35. Investors remained cautious ahead of the Reserve Bank of India’s (RBI) monetary policy decision on Friday.

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Despite positive global cues and a decline in US bond yields, the market struggled as sectoral indices such as Realty (-2.19%) and Consumer Durables (-1.84%) witnessed significant declines. In contrast, sectors like Pharma (+0.64%) and IT (+0.31%) managed to stay in the green, aided by a weaker rupee against the US dollar.

Key Reasons for Market Decline:

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RBI Policy Uncertainty:
Investors await clarity on the RBI’s monetary policy decision, with a potential 25 basis points rate cut on the horizon. The uncertainty around the duration of the rate cut cycle prompted profit-booking in rate-sensitive sectors like realty, auto, and banking.
Earnings Expectations:
Weak performances from market heavyweights Bharti Airtel, ITC, and SBI, ahead of their Q3 earnings announcements, added to the market’s bearish sentiment.
Rupee Depreciation:
The Indian rupee hit a record low of 87.58 during the session, which weighed on investor sentiment. The domestic currency has already declined over 2% this year.
Foreign Capital Outflows:
Foreign Portfolio Investors (FPIs) offloaded ₹1,682.83 crore worth of Indian equities on February 5, resuming their selling streak after a brief pause.
Technical Resistance Levels:
The Nifty 50 failed to break the 23,800 resistance level during intraday trading and fell back to close near 23,600. Analysts suggest 23,500 remains a crucial support level, with a decisive fall below this mark potentially shaking investor confidence.

Market Outlook:

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Technical analysts maintain a cautiously optimistic view, with key resistance levels at 23,800 and 24,050. However, a breach below 23,500 could trigger further bearish sentiment. Investors now await Friday’s RBI policy announcement, which will significantly influence market direction in the short term.