The Nifty 50 traded lower on October 8, 2026, as investors reacted to the Reserve Bank of India’s decision to hike the repo rate by 25 basis points to 5.50%. The move, aimed at controlling inflation, has increased caution in the markets, while persistent selling by foreign investors and a weakening rupee continue to add pressure on equity valuations.
The Reserve Bank of India (RBI) surprised the market late on October 7 by raising the policy repo rate by 25 basis points to 5.50%. This action, which shifts the central bank's stance to 'calibrated tightening,' signals that the regulator is prioritizing inflation control over immediate growth support. Following this, the Nifty 50 faced selling pressure on October 8, extending the decline seen after the initial announcement. For investors, this hike means that banks are likely to raise interest rates on loans, which can increase borrowing costs for both companies and households, potentially impacting corporate profit margins in the coming quarters.
Market sentiment is currently struggling under a combination of local and global factors. Persistent selling by foreign institutional investors (FIIs) has been a major headwind throughout 2026. Global factors are also amplifying this stress, with the rupee recently touching a five-month low of 96.77 against the US dollar and crude oil prices hovering near $102 per barrel. Additionally, rising US Treasury yields, which have reached 5.37 percent, are making US bonds more attractive for global investors compared to emerging market equities like India, leading to capital outflows.
Despite the broader market decline, the Information Technology (IT) sector has offered a defensive cushion. Large-cap IT companies, including Tata Consultancy Services, Infosys, HCL Technologies, and Tech Mahindra, have shown relative stability. Investors are viewing these stocks as a safe harbor ahead of the Q2 FY27 earnings season. The market focus is now shifting toward management commentary from these tech giants; investors are looking for insights on whether discretionary client spending is holding steady despite the challenging global economic environment. If IT companies report strong earnings, they may help anchor the index, whereas weak guidance could remove this last layer of support.
While the RBI has revised its FY27 real GDP growth forecast upward to 7.1 percent, the shift toward a stricter monetary policy suggests that the regulator is concerned about inflation, which it now projects at 5.2 percent. Investors should track how this change in policy affects credit growth and consumer demand in the upcoming months. The immediate monitorables for the market include the quality of Q2 earnings, the continuity of FII selling, and whether the rupee can stabilize from its recent lows. Until these variables show signs of improvement, analysts expect volatility to persist in the Nifty, with technical support levels being closely watched near the 22,600 mark.