Two Green Days, One Big Policy Test

 

Two Green Days, One Big Policy Test

Dalal Street’s two-session relief bounce followed an eight-week slide. Softer crude and strong company updates helped, but a higher volatility reading and the RBI decision due Wednesday keep the recovery in perspective.

By Murthy ASR  ·  6 October 2026

Illustration: Mumbai’s financial district and market activity. AI-generated visual.

Indian equities extended their rebound on Tuesday, with the Sensex adding 685.34 points, or 0.95%, to close at 73,067.81. The Nifty 50 rose 220.35 points, or 0.98%, to 22,776.10. Both benchmarks gained for a second straight session, after eight consecutive weekly declines — the longest such run in about 25 years — had ended with last week’s close. Two positive sessions offer relief; they do not, by themselves, establish that the broader correction is over.

The session in numbers

Figure 1. Daily close-to-close gains on 5 and 6 October. Source values are rounded.

The advance was broader than the headline indices: the Nifty Midcap 100 rose 1.08% and the Nifty Smallcap 100 gained 1.56%. Most sector indices finished higher, led by pharma, while IT, PSU and realty indices were exceptions. Yet India VIX, the market’s measure of expected near-term volatility, climbed 8.15%. That rise is a reminder that investors were still pricing in uncertainty ahead of the RBI decision.

Market measure	6 Oct close / move	Context
BSE Sensex	73,067.81  |  +0.95%	Second consecutive session higher
NSE Nifty 50	22,776.10  |  +0.98%	Closed above 22,700
Nifty Midcap 100	+1.08%	Broader-market participation
Nifty Smallcap 100	+1.56%	Small caps outperformed frontline indices
India VIX	+8.15%	Volatility gauge rose despite the rally

Company updates gave the rally local anchors

Trent was among the session’s standout movers, rising 12.78%. Its business update reported standalone revenue, excluding GST, of ₹5,788 crore for the September quarter, up 23% from ₹4,724 crore a year earlier. The company also said it had opened its 1,000th Zudio store and had 1,342 stores across its concepts at 30 September. These are operating-update figures; the full quarterly results provide a broader view of margins and profitability.

Illustration: A contemporary Indian apparel retail floor; not a Trent or Zudio store. AI-generated visual.

Bank shares also supported sentiment. Kotak Mahindra Bank’s provisional Q2 update showed net advances of ₹5.77 lakh crore, up 24.7% year on year, and deposits of ₹6.51 lakh crore, up 23.2%. The figures are business indicators pending the bank’s full results; market commentary also pointed to gains in other large financial stocks. The day’s price action alone cannot establish that institutional buying was the principal driver.

Oil eased; the rupee did not turn stronger

Lower crude prices offered some relief to an oil-importing economy. In the historical Brent futures series used here, the 6 October settlement was $97.90 a barrel, down 2.41% from the previous settlement of $100.32. Crude below $100 can ease pressure on import costs and input-sensitive businesses, but a single session does not reset the outlook for India’s trade balance, inflation or fiscal position.

The dollar-rupee reference series closed at ₹96.437 per dollar on 6 October, compared with ₹96.300 on 5 October. The rupee therefore weakened marginally in that series; it would be inaccurate to describe it as having strengthened or stabilized on the day. Currency quotes can differ by venue and time of observation, so the series and date matter.

Global sentiment also took cues from US employment data released on Friday, 2 October: payrolls increased by 29,000 in September and unemployment was 4.2%, according to the US Bureau of Labor Statistics. The softer jobs number eased some expectations of aggressive US monetary tightening, according to market reporting, although one monthly release cannot settle the US rates outlook.

The RBI decision is the next test

Illustration: Monetary-policy setting. Generic AI-generated visual; not an official RBI image.

The Reserve Bank of India’s Monetary Policy Committee was scheduled to announce its decision at 10 a.m. on Wednesday, 7 October, with the Governor’s press conference at noon. The policy rate stood at 5.25% before the meeting. Polls published ahead of the decision leaned toward a 25-basis-point increase to 5.50%: eight of ten economists in a Business Standard poll, nine of ten in a Mint poll and 35 of 61 in a Reuters poll expected a hike. Some economists expected a pause. These are forecasts, not the outcome.

What markets were weighing	What was known before the decision
25 bps increase	The majority view in the cited economist polls; would take the repo rate to 5.50% if delivered.
Pause at 5.25%	A minority forecast; the RBI could also signal how it weighs inflation, growth and currency pressures.

For investors, the decision will include more than the repo-rate number: the policy statement’s assessment of inflation, growth, liquidity and the rupee will shape expectations. A hike could raise borrowing costs for rate-sensitive businesses; a pause could preserve near-term support while leaving questions about inflation and currency stability. Those are possible transmission channels, not guaranteed one-day market reactions.

A recovery, with conditions

The evidence for Tuesday’s bounce is concrete: two consecutive sessions of gains, participation beyond large caps, company-specific operating updates and a decline in Brent futures. The counter-signals are just as relevant: the volatility index rose, the rupee remained near record-weak territory in the cited series, and the RBI decision was still ahead. The rally marks a welcome interruption in a difficult run for equities. Whether it develops into a sustained recovery will depend on policy guidance, earnings and how global oil, rates and currency conditions evolve.

Murthy ASR writes Biz Masala, a column on business, technology and corporate stories.

Sources and notes

• NDTV Profit, market close, 6 October 2026: https://www.ndtvprofit.com/markets/stock-market-today-live-sensex-today-gift-nifty-hints-positive-start-for-nifty-50-12143564?pfrom=home-business_topstories

• Kotak Neo, market close, 5 October 2026: https://www.kotakneo.com/news/market-news/sensex-nifty-end-higher-as-crude-oil-prices-ease-and-rupee-gains/

• Moneycontrol, eight-week losing streak context: https://www.moneycontrol.com/news/photos/business/markets/markets-reel-for-8th-straight-week-longest-losing-streak-in-25-years-rupee-slips-50-paise-14043629.html

• Trent Q2 business update, exchange release reproduction: https://bazaarwatch.com/announcement/191403/trent-limited-press-release

• Kotak Mahindra Bank provisional Q2 update: https://www.moneycontrol.com/news/business/banks/kotak-mahindra-bank-q2-update-advances-rise-24-7-deposits-jump-23-2-yoy-14044934.html

• Brent futures historical prices: https://www.investing.com/commodities/brent-oil-historical-data

• USD/INR historical prices: https://in.investing.com/currencies/usd-inr-historical-data

• US Bureau of Labor Statistics, Employment Situation, September 2026: https://www.bls.gov/news.release/empsit.htm

• Business Standard, RBI MPC preview and poll: https://www.business-standard.com/finance/news/business-standard-poll-rbi-may-hike-repo-rate-by-25-bps-in-october-meet-126100200016_1.html

• Mint, RBI economist poll: https://www.livemint.com/economy/rbi-monetary-policy-repo-rate-indian-economy/amp-11791107863686.html

• Economic Times, Reuters poll summary: https://economictimes.indiatimes.com/markets/stocks/news/markets-bet-on-rbi-rate-hike-as-inflation-pressure-builds/articleshow/134683865.cms

Figures are as reported by the cited sources and may vary with revisions, market-data provider, contract or observation time. This article is for information only and is not investment advice.