Domestic equity markets came under pressure on Wednesday, October 7 2026, after the Reserve Bank of India (RBI) unexpectedly raised the repo rate by 25 basis points to 5.5%, bringing a two-day rally in the stock market to an abrupt halt.
Investor sentiment weakened following the RBI’s decision to increase borrowing costs and shift its monetary policy stance to “calibrated tightening.” The move triggered selling across several key sectors and weighed on the benchmark indices.
At the close of trading, the BSE Sensex fell 429.11 points, or 0.59%, to 72,638.70. The NSE Nifty 50 declined 173.05 points, or 0.76%, to 22,603.05.
Nifty Nears Crucial 22,600 Support
Market analysts are closely watching the 22,600 level on the Nifty, which emerged as an important support zone after Wednesday’s decline.
According to analysts, a sustained break below 22,600 could trigger further selling pressure and push the index towards 22,400. On the upside, 22,800 is likely to remain the first major hurdle if the market stages a recovery.
The market’s near-term direction is expected to depend largely on investor reaction to the RBI’s policy decision and developments in interest-rate-sensitive sectors.
Metal Stocks Bear the Brunt
The metal sector emerged as the biggest laggard during Wednesday’s trading session, with heavy selling pressure pushing the Nifty Metal Index lower.
Among individual Nifty constituents, Titan Company, Bharat Electronics Ltd (BEL), and Hindalco Industries were among the stocks recording the sharpest declines.
The selling pressure reflected broader investor caution following the RBI’s unexpected policy shift.
PSU Bank Stocks Offer Some Support
While most sectors struggled, public sector bank stocks witnessed buying interest during the session. The Nifty PSU Bank Index managed to close in positive territory, providing some support to the broader market.
The relative strength in PSU banking stocks stood out against the weakness seen in metal and several other sectors.
Mid- and Small-Cap Stocks Show Mixed Trend
The broader market also remained mixed. The Nifty Midcap 100 declined 0.63%, indicating continued weakness in mid-cap stocks.
However, small-cap stocks bucked the broader trend. The Nifty Smallcap 100 gained 0.30% at the close, outperforming both the benchmark indices.
Market Outlook
With the Nifty ending just above the crucial 22,600 support level, investors are likely to closely track the index’s next move. A break below this level could intensify selling pressure, while a recovery above 22,800 may provide some relief to the market.
The RBI’s unexpected rate hike and its shift towards a “calibrated tightening” stance are likely to remain key factors influencing market sentiment in the near term.
