Markets dip as profit-taking and oil prices weigh ahead of RBI decision

Markets experienced a dip on Tuesday, succumbing to profit-taking, higher oil prices, and investor caution heading into the Reserve Bank of India’s monetary policy decision. The Nifty 50 closed at 24,614.90, down 159 points or 0.64 percent, while the Sensex fell 210 points. The Nifty Midcap 100 saw a 0.3 percent decline, whereas the Nifty Smallcap 100 managed a marginal rise of 0.2 percent.

Market breadth was slightly negative, with the BSE advance-decline ratio at 0.99. Ajit Mishra, SVP Research at Religare Broking, noted that profit-taking took place after Monday's sharp rally, as heavyweights underperformed and caution loomed over the RBI's decision. Sectors such as Realty, Oil & Gas, FMCG, and IT faced the steepest losses, while Media and Metal indices were the only ones to close in the green.

Within the Nifty 50, Apollo Hospitals, Hindalco, and Trent saw gains, while Grasim, HDFC Life, and Bajaj Auto were the biggest losers. The government's two-day Offer for Sale in LIC kept the markets on edge as it aimed to sell up to a 6.5 percent stake at a floor price of Rs. 382 per share, potentially raising Rs. 31,000 crore and reducing its holding to 90 percent, as per SEBI's norms.

LIC's stock dropped 7-8 percent in response to the offer, but saw strong institutional interest. Pidilite Industries reported a 30 percent year-on-year increase in net profit and revenue for Q1 FY27, while Uno Minda's auto components maker reported a revenue of Rs. 5,342 crore and net profit of Rs. 315.5 crore. Brent crude prices rebounded over 2 percent to above $86 per barrel, while WTI climbed to $82.3 as uncertainty lingered around US-Iran diplomatic talks.

Brent crude had plummeted 7 percent the previous day following the cancellation of a planned military strike on Iran. Silver gained about 1 percent to $58.7, while the Indian rupee dropped 4 paise to close at 95.38 against the dollar, influenced by rising crude prices and a stronger greenback. Market focus now shifts to the RBI’s Monetary Policy Committee announcement, expected early Wednesday, with central bank commentary on inflation and growth expected to be closely scrutinized.

Earnings releases from Power Grid, Aurobindo Pharma, Cummins India, along with US jobs data, including Friday's nonfarm payrolls report, are anticipated to shape market sentiment in the coming days.