Indian Stock Market Eyes Wednesday Verdict: With RBI Policy To Trump Tariffs—Will Nifty Reclaim 25,000?

The Indian stock market awaits a swing-worthy session on Wednesday with the Reserve Bank of India (RBI)'s monetary policy committee (MPC) verdict due at 10:00 am, amid a cautious investor sentiment over US tariff threat. The domestic equity benchmarks Sensex and Nifty 50 settled lower on Tuesday, Aug. 5, after sentiment weakened following fresh tariff threats from US President Trump over India’s continued imports of Russian oil.

Ahead of the central bank's policy decision, the 30-share BSE Sensex fell by 308.47 points to settle at 80,710.25 today. The NSE Nifty 50 benchmark fell 73.20 points to close at 24,649.55. During the session, it slipped by 132.45 points or 0.53 per cent to hit 24,590.30. Nifty is over 300 points away to reclaim its psychological 25,000-mark again, last hit on Aug. 1, 2024.

Weakness persisted in pharma and IT companies, which are among the largest exporters to the US. Infosys, HDFC Bank, and HUL were among the top laggards. Broader markets mirrored the trend, with the Nifty Midcap 100 and Smallcap 100 shedding close to 0.4% each, underscoring a risk-off undertone.

Sectorally, the Nifty Oil & Gas index led the decline, shedding 0.96% amid concerns about future import restrictions on Russian oil. Pharma and FMCG corrected 0.83% and 0.72%, respectively. The banking space remained under pressure, with the Nifty Bank index retreating 0.72%.

On the flip side, Nifty Auto managed to eke out modest gains of 0.37%, gaining traction from July volumes. Sentiment was also weighed by INR depreciation. Volatility declined slightly, as the India VIX fell 1.84% to 11.71, indicating reduced fear and improved trader sentiment.

Trump threatened to impose higher tariffs on goods imported from India, prompting the government to call the move "unjustified" and pledge to safeguard its economic interests, further straining ties between the two nations.

Investors are waiting for the RBI's policy decision on Wednesday, in which it is expected to hold its key rate at 5.50%. However, calls for a rate cut have also risen after the US slapped 25% tariffs on goods from India.

"Investors are awaiting the upcoming RBI policy decision, where the market has marginal expectations of a rate cut, in the near-term," claimed Vinod Nair, Head of Research, Geojit Investments Limited.

According to Kranthi Bathini, Equity strategist, WealthMills Securities Pvt Ltd, the current RBI's policy committee is pro-growth and has prioritized stable economic growth since the beginning of the rate cut cycle. "Inflation has been cooling in India for the past few months and despite the rupee depreciation, don't be surprised even if there's a rate cut tomorrow," he suggested.

Most D-Street analysts believe that the impact of Trump tariffs on the market will only be sentiment-wise. Bathini voiced the same view, saying, "Tariff impact will only be sentimental and will not affect the country's GDP growth," he said.

Even as the market has priced in a status quo on the interest rates, Bathini said that if the RBI delivers a surprise rate cut tomorrow, the stock market will react positively. According to the expert, lower interest rates by the RBI will also provide a boost to the corporate earnings growth.

"With global volatility and geopolitical noise likely to persist, Nifty 50 is likely to consolidate between 24,600–24,800 in the near term. Eyes will be on the RBI policy, US macro data, and global trade developments for further direction," said Vikram Kasat, Head - Advisory, PL Capital.

Gift Nifty trades around 24,650 level, down nearly 93.5 points, a discount of nearly 66 points from the Nifty futures’ previous close at 24,716, indicating a muted start for the Indian stock market on Aug. 6, 2025.

On Tuesday, Nifty 50 opened flat and witnessed selling pressure around the 24,700 mark but traded in a narrow range between 24,600-24,730. Shrikant Chouhan, Head-Equity Research, Kotak Securities believes that the market is exhibiting non-directional activity, with traders possibly waiting for either side to break out.

"The index near term support stands at 24,600-24,550 zone and a break below this will aggravate the selling pressure towards 24,400. The index immediate hurdle is placed at 24,800 and a break above this will lead to further up move," said Kunal Shah, Senior Technical and Derivative Analyst, Mirae Asset Sharekhan.

Analysts say the combined technical and derivatives setup suggests that as long as the key support levels hold, there is a potential for an upward continuation. "Traders are advised to remain cautiously optimistic, use dips to accumulate quality names, and manage risk with appropriate stop-loss strategies," said Mandar Bhojane, Senior Technical & Derivative Analyst, Choice Broking.

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