Indian stock markets are bracing for a potentially volatile trading session on February 6, 2026, as investors await the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) decision. The Sensex and Nifty 50 are likely to open lower, mirroring weakness in global markets and sustained selling pressure in US tech stocks.
RBI Policy in Focus
The RBI's Monetary Policy Committee (MPC) is scheduled to announce its February monetary policy later today, which will be the last policy for FY26. The announcement will be made by RBI Governor Sanjay Malhotra at 10 am, followed by a press conference at noon. The markets widely expect the MPC to maintain the repo rate unchanged at 5.25%. Since February 2025, the RBI has cumulatively cut the repo rate by 125 basis points.
The MPC's decision comes against the backdrop of easing inflation, steady economic growth, and the recent India-US trade agreement. While a monetary stimulus is not currently deemed necessary, the RBI is likely to adopt a wait-and-see approach to allow the transmission of previous rate cuts to fully play out. The central bank is also expected to maintain a "neutral" stance, keeping the option open for future rate cuts if needed.
Market Expectations and Analysis
Ahead of the RBI's announcement, market analysts are suggesting a cautious approach. Trends on Gift Nifty indicate a negative start for the Indian benchmark index.
Shrikant Chouhan, Head of Equity Research at Kotak Securities, anticipates a weak intraday market texture. He cautioned that a fresh selloff could occur if the Sensex dips below 83,200, potentially leading to a fall towards 83,000-82,500. On the upside, 83,800 is expected to act as an immediate resistance zone, and surpassing this level could propel the index towards 84,000-84,200.
Aakash Shah, Technical Research Analyst at Choice, noted that the Nifty 50 index remains range-bound, supporting a cautiously positive near-term outlook with a strategy of buying on dips as long as the key support zone holds. Nifty derivatives data reveals heavy put writing at the 25,500 strike and significant call writing at the 25,700 strike, defining a narrow trading range in the near term. Bajaj Broking Research suggests that holding above the support area could open upside towards 25,850 and 26,000 levels in the coming weeks.
Vipin Dixena, a SEBI-registered analyst, observed that the Sensex is gradually slipping on the intraday chart after failing to sustain above the post-Budget resistance zone, indicating fading upside momentum.
Thursday's Market Performance
On Thursday, the Indian stock market ended its three-day rally, with both Sensex and Nifty settling lower. The Sensex declined by 503.76 points, or 0.60%, to close at 83,313.93, while the Nifty 50 settled 133.20 points, or 0.52%, lower at 25,642.80. Twelve of the 16 major sectoral indices traded in the red, with metal stocks leading the decline.
Global Cues and Other Factors
Global market weakness, geopolitical uncertainties, and profit-booking following a recent uptick after the India-US trade deal contributed to Thursday's decline. Intense selling in metal, IT, and capital goods stocks also dampened market sentiment.
Impact of RBI Policy on Stock Market
The RBI's monetary policy plays a crucial role in influencing the stock market. Interest rates and liquidity are key factors. A tight monetary policy, characterized by higher interest rates, can decrease consumer spending and investment, leading to a decline in corporate earnings and a negative impact on the stock market. Conversely, a loose monetary policy, with lower interest rates, can increase consumer spending and investment, boosting corporate earnings and potentially lifting the stock market.
Rate-sensitive sectors like banks, financial institutions, auto, and real estate are particularly responsive to changes in monetary policy.