Nifty, Sensex Close Lower on F&O Expiry, RBI MPC in Focus

Indian equity benchmarks ended Tuesday's session in the red, as traders squared off positions on the day of monthly derivatives expiry and stayed cautious ahead of the Reserve Bank of India's Monetary Policy Committee decision.

The Nifty and the Sensex both closed lower, mirroring the broader mood of caution that has gripped Dalal Street in recent sessions. Volatility was the day's hallmark, with the indices swinging between gains and losses before settling firmly in negative territory.

F&O Expiry Keeps Traders on Edge

The monthly futures and options expiry played a significant role in Tuesday's price action. With contracts set to expire, traders rushed to roll over or close positions, leading to sharp intraday moves in several heavyweight stocks.

Analysts said the expiry-induced volatility was expected, but the sheer scale of position unwinding added pressure on the indices. The Nifty's options chain showed heavy concentration at key strike prices, which further amplified the swings.

RBI MPC Decision Awaited

The bigger trigger for the market, however, remains the RBI's monetary policy announcement, scheduled for later this week. Investors are keenly watching the central bank's stance on interest rates, especially amid evolving global and domestic economic conditions.

Market participants are divided on whether the RBI will hold rates steady or opt for a cut. The cautious positioning ahead of the decision kept buying interest in check, even as some pockets of the market saw selective accumulation.

Sectoral Trends

Selling pressure was visible across most sectors, though banking and financial stocks were among the key drags. IT and pharma names also witnessed profit booking, while select midcap and smallcap counters managed to buck the trend.

Broader market indices, too, ended lower, reflecting the overall risk-off sentiment. The volatility index, India VIX, inched up, signalling that traders are bracing for sharper moves in the coming sessions.

What to Watch Next

With the F&O expiry out of the way, the spotlight now shifts squarely to the RBI MPC's verdict. The central bank's commentary on inflation, growth, and liquidity will likely set the tone for the market in the near term.

Global cues, including crude oil prices and US Federal Reserve signals, will also remain on investors' radar. For now, the market is likely to remain range-bound as participants await fresh triggers.