Sensex, Nifty drop 1% in early trade; rate-sensitive banking, auto stocks under pressure ahead of RBI policy

The Indian equity market opened sharply lower on Tuesday amid persistent concerns about tense situation in the Middle East. The BSE Sensex dropped as much as 824 points, or 1.1%, to hit a low of 73,282.41 in opening trade, while the NSE Nifty fell 249 points, or 1.08%, to 22,719.30, as caution prevailed in the market ahead of the RBI policy announcement tomorrow.

However, both indices trimmed some of their early losses as the session progressed. The 30-share Sensex was last trading 540 points lower, down 0.73% at 73,566, while the Nifty 50 slipped 166.75 points, or 0.73%, to 22,801.50.

Broader markets also remained under pressure, with the Midcap and smallcap indices declined up to 1%. The NIFTY Midcap 100 fell 1.11% and the NIFTY Smallcap 100 was down around 0.63% at the time of reporting.

Market volatility stayed elevated, with the India VIX hovering around 25.64, indicating heightened investor caution amid persistent uncertainties.

“Geopolitical tensions in West Asia continue to influence market sentiment, with the U.S.–Iran conflict now entering its sixth week. However, reactions appear more measured, suggesting investors are adopting a wait-and-watch approach rather than displaying heightened risk aversion,” said Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealth tech firm.

He added that repeated rhetoric, particularly from the U.S., has had a diminishing impact on market behaviour, with recent developments failing to trigger sharp reactions, pointing to a degree of fatigue among market participants toward the evolving conflict dynamics.

Ponmudi further noted that crude oil prices, hovering in the $110–113 range, remain a key overhang. Elevated prices raise concerns about inflation, widen India’s import bill, and exert pressure on the currency. However, the relative stability of the rupee—trading in the 92.50–93.20 range—suggests active intervention by the Reserve Bank of India, which has helped contain volatility and lend some support to overall sentiment.

Top gainers and losers

On the Sensex pack, technology stocks led the gains, with HCL Technologies  emerging as the top performer, rising 1.22% to ₹1,419.60. Other IT majors also traded in the green, with Tech Mahindra  up 0.82%, Tata Consultancy Services  gaining 0.46%, and Infosys adding 0.25%.

Among financials, Bajaj Finance  advanced 0.86%, providing additional support to the index. Pharma major Sun Pharmaceutical Industries  also traded higher, gaining 0.53%, while NTPC rose 0.31%, indicating modest strength in select defensives and PSU stocks.

However, the broader market tone remained weak, with a majority of index constituents trading in the red. InterGlobe Aviation emerged as one of the top losers, dropping nearly 2% in early trade.

Index heavyweight Reliance Industries  declined 0.92%, while banking majors such as HDFC Bank , ICICI Bank , State Bank of India , and Axis Bank  fell between 0.84% and 1.22%. The weakness in financial stocks weighed on overall sentiment, given their significant index weight.

Consumption and industrial names also saw selling pressure. Hindustan Unilever slipped 1.05%, while Asian Paints and Titan Company dropped 1.16% and 1.54%, respectively. Engineering major Larsen & Toubro fell 1.07%, reflecting weakness in capital goods.

Auto and metal stocks were also under pressure, with Mahindra & Mahindra declining 1.68%, Maruti Suzuki down 0.61%, and Tata Steel slipping 0.28%. Meanwhile, UltraTech Cement fell 1.55%, indicating broad-based selling across cyclical sectors.

Other notable laggards included Adani Ports and Special Economic Zone, down 0.75%, Power Grid Corporation of India, which declined 0.91%.

Rate-sensitive sectors under stress ahead of RBI policy

Sectorally, the trend remained broadly negative, with rate-sensitive leading the fall as investors turned jittery ahead of the RBI policy announcement due tomorrow. The central bank is widely expected to maintain the status quo in its first policy announcement of fiscal 2027, amid a fragile global environment due to the Middle East crisis and rising crude prices. 

The NIFTY Auto index dropped 1.53%, while the NIFTY PSU Bank index fell 1.44%, highlighting continued pressure on banking and automobile stocks. The NIFTY Private Bank and NIFTY Financial Services 25/50 indices also declined 1.05% and 0.85%, respectively.

Defensive segments, too, were not entirely insulated. The NIFTY FMCG index slipped 0.71%, while the NIFTY Pharma and NIFTY Healthcare indices declined 0.45% and 0.70%, respectively. The NIFTY Consumer Durables index also fell nearly 1%, indicating broad-based weakness across consumption-driven sectors.

Among other sectors, the NIFTY Oil & Gas index dropped 0.72%, while the NIFTY Media and NIFTY Realty indices posted marginal losses, reflecting lacklustre momentum.

On the other hand, the NIFTY IT index remained largely flat with a marginal gain of 0.05%, supported by selective buying in technology stocks, while the NIFTY Metal index bucked the trend, rising 0.33% on the back of strength in commodity-linked names.

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