optimism | All eyes on RBI MPC meet outcome today

FPJ News Service New Delhi

Indian markets recovered on Tuesday on strong hopes of fruitful bilateral talks and a trade agreement between India and US before the end of December 2025, and promising domestic economic fundamentals, including a rate cut by the RBI MPC today. Interest of many nations proposing to enter into trade pacts with the US also supported the market sentiment.

Investors’ wealth improved by Rs 7.32 lakh crore as equity markets staged a strong comeback Monday’s fall. The market capitalization of BSE-listed companies soard by Rs 7.32 lakh crore to $4.62 trillion. FIIs offloaded equities worth Rs 4,994 crore on Tuesday, while domestic institutions bought shares worth Rs 3,097 crore. The BSE-30 Sensex jumped 1,089 points to settle at 74,227.08 with 29 of its components ending in the green. During the day, it climbed 2.35% to 74,859.39.  The NSE Nifty surged 374.25 points to 22,535.85. 

World markets, especially Asian and European markets witnessed a recovery after Monday’s crash. Tokyo's Nikkei 225 index, Hong Kong's Hang Seng, Shanghai SSE Composite index and South Korea’s Kospi settled in the positive territory.

Nikkei 225 index jumped 6%. “Growing optimism on the Indian economy is driven by local demand and low reciprocal tariff and ongoing trade negotiations with the US. Meanwhile, China’s currency devaluation, aimed at mitigating the impact of escalating trade tensions, is exerting downward pressure on the Indian rupee. Additionally, all eyes are on the RBI policy decision, where a 25-bps rate cut is anticipated,” said Vinod Nair, Head of Research, Geojit Investments.

“The heightened uncertainty and volatility that gripped markets worldwide will linger for some more time. The trade war is likely to be confined to the US and China. Others including the EU and Japan have opted for negotiations. India has already started negotiations.

The risk of a recession in the US has been increased, and China is likely to be the worst-hit economy. Trump’s threat of another 50% tariff on China, if carried out, will almost freeze Chinese exports to US. China will try to dump its products like metals in other countries, and this will keep international metal prices depressed.

Investors may continue in wait and watch mode since it will take time for clarity to emerge. However, since India’s macros are stable and we can grow at around 6% in FY26, and the valuations are fair particularly in largecaps, long-term investors can start nibbling at high quality largecaps like the leading financials. Since Trump is unlikely to impose tariffs on pharma at this stage, pharma stocks, which are attractively priced now, appear to be good to buy,” said Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.