Sensex, Nifty opening: Will markets rise or fall with RBI MPC decision today?

Benchmark indices are likely to open lower on Wednesday as investors brace for the Reserve Bank of India's monetary policy decision, with a 25-basis-point repo rate hike widely expected.Persistent foreign fund outflows, elevated crude oil prices and a weaker rupee are also likely to keep sentiment cautious.The GIFT Nifty was trading at 22,677.50, down 96.50 points or 0.42%, as of 8:10 am, indicating a weak start for the Nifty 50. The index closed at 22,776.10 on Tuesday, while the Sensex ended at 73,067.81, up 685.34 points or 0.95%.RBI RATE HIKE IN FOCUSThe RBI's Monetary Policy Committee will announce its policy decision later today, with the central bank widely expected to raise the repo rate by 25 basis points. This would be the first rate increase since February 2023. Investors will be watching Governor Sanjay Malhotra's comments on inflation risks and the future policy path, particularly as higher crude oil prices and global bond yields add to inflation concerns.Goldman Sachs analysts led by Santanu Sengupta said the MPC could also shift its stance from neutral to calibrated tightening or withdrawal of accommodation. The market has already seen significant pressure since the RBI's previous policy meeting on August 5. The Nifty 50 has fallen around 7.5% during this period, dragged by higher oil prices, rising US bond yields and foreign outflows.FII SELLING REMAINS A MAJOR CONCERNForeign institutional investors have continued to sell Indian equities despite the recent market rebound.FIIs sold equities worth Rs 2,961.30 crore on Tuesday, following selling of Rs 4,699.14 crore on Monday and Rs 9,484.22 crore on October 1.They had also sold Rs 10,148.41 crore on September 30 and Rs 9,980.22 crore on September 29.That takes FII cash-market selling to around Rs 37,273 crore across these five trading sessions.Domestic institutional investors have provided a cushion, buying Rs 5,088.92 crore on Tuesday and Rs 5,181.62 crore on Monday. They also bought Rs 10,041.84 crore on October 1 and Rs 11,271.73 crore on September 30.However, the continued foreign selling remains an overhang for large-cap stocks.RUPEE, CRUDE OIL ADD TO PRESSUREThe rupee also hit a two-month low in the previous session, adding another concern for investors as the RBI weighs its policy decision.Brent crude rose around 1% to $101.5 per barrel, with storm risks to US oil output and Houthi attacks on Saudi Arabia outweighing the impact of increased Middle East oil supplies.Higher crude prices are particularly important for India because they can increase inflationary pressure, widen the import bill and put pressure on the rupee.WHAT HAPPENS TO BANKS IF RBI HIKES RATES?A rate hike could have different effects across financial stocks.VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said a 25-basis-point hike appears likely given rising inflationary pressures and bond yields, but added that higher rates could actually benefit banks by improving margins on floating-rate loans.Non-bank lenders could face more pressure, however. JM Financial said higher funding costs could reprice faster than loan yields for some NBFCs, particularly fixed-rate vehicle and microfinance lenders. Floating-rate housing financiers may be relatively better positioned.Real estate and consumer companies could also see their earnings outlook affected by the RBI's assessment of inflation and economic growth.NIFTY OUTLOOKPabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking, said the Nifty formed a bullish candle on Tuesday and extended its recovery for a second straight session.“Volatility is likely to be high in today's session on account of the RBI monetary policy outcome,” Mukherjee said.He said holding above Tuesday's low of 22,561 could support a move towards 23,000.On the downside, the key support zone is at 22,400-22,200. A break below the April 2026 low of 22,182 could signal a further decline, he said.For a meaningful trend reversal, the Nifty would need to reclaim the 23,000-23,100 zone, according to Mukherjee.Global markets remain relatively supportive despite the pressure on Indian equities. US stocks rose overnight, with the S&P 500 and Nasdaq hitting record highs as easing US Treasury yields reduced expectations of a near-term Federal Reserve rate hike.Asian markets, however, were muted in early trade.For equities, the RBI decision will be the biggest domestic trigger today. Alongside the rate decision, investors will track the central bank's inflation and growth outlook, its policy stance, the rupee, crude oil prices and foreign fund flows.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends