Stock Market Investors Brace for Middle East Tensions and RBI’s Upcoming Policy Decision

Investors are keeping a close watch on the rising tensions in the Middle East, as well as the Reserve Bank of India’s (RBI) upcoming policy decision and company results for the second quarter, say market experts.

The escalating geopolitical crisis in the Middle East has created global concerns, but analysts believe the Indian stock market could bounce back, thanks to resilience shown by US markets. They also expect that any hint of a possible rate cut from the RBI’s Monetary Policy Committee (MPC) could boost market sentiment.

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Ajit Mishra, SVP at Religare Broking Ltd, highlighted that global geopolitics and its impact on oil prices will be key factors for investors. He also noted that the stability in US markets amid global volatility could encourage a recovery in Indian stocks.

V.K. Vijayakumar from Geojit Financial Services pointed out that even though crude oil prices have gone up recently, the stock markets have largely ignored the Middle East tensions so far. He warned that if Israel targets oil installations in Iran, the situation could worsen.

MPC October Meeting

The RBI’s MPC will announce its decision on policy rates on October 9. This coincides with the earnings season, with tech giant TCS set to release its Q2 results on October 10, and India’s Index of Industrial Production (IIP) data scheduled for October 11.

The Indian stock market experienced a sharp drop after three weeks of gains, losing 4.5% last week due to weak global signals. Foreign investors have been pulling money out of Indian equities, and many have shifted towards the Chinese market for better returns. In the first few days of October, foreign investors sold ₹27,142 crore worth of Indian stocks, leading to sharp declines in indices like Nifty and Sensex.

Most sectors ended in the red last week, with real estate, auto, and energy stocks taking the biggest hits, though the metals sector held steady.