Sensex falls 429 pts, Nifty ends at 22,603 as RBI hikes rate

The Indian stock market ended sharply lower on Monday, October 5, 2026, as the Reserve Bank of India (RBI) announced an unexpected hike in the policy repo rate, citing persistent price pressure. The benchmark BSE Sensex fell 429 points, while the Nifty 50 closed at 22,603. The rate hike, which came amid rising inflation concerns, weighed heavily on rate-sensitive sectors such as banking, real estate, and automobiles. Analysts say the move signals a prolonged tight monetary stance, which could dampen corporate earnings growth in the near term.

In its monetary policy review, the RBI raised the repo rate by 25 basis points, citing the need to anchor inflation expectations. The central bank also revised its inflation forecast upwards for the current fiscal year, pointing to elevated food and fuel prices. Market participants reacted negatively, with the Sensex plunging over 600 points intraday before recovering some losses. The broader market breadth remained weak, with 1,842 stocks declining on the BSE against 1,203 advances. Foreign institutional investors (FIIs) were net sellers, offloading equities worth ₹1,245 crore, according to provisional exchange data.

"The RBI's rate hike was a surprise for the markets, as most analysts had expected a pause. The central bank's hawkish tone suggests that inflation control is the top priority, even at the cost of near-term growth. Investors should brace for volatility and focus on quality stocks with strong balance sheets."

— Analysts say

The sell-off was broad-based, with the Nifty Bank index falling 1.2% and the Nifty Auto index dropping 1.5%. Realty stocks were the worst hit, with the Nifty Realty index sliding 2.1%. However, defensive sectors like FMCG and pharmaceuticals managed to limit losses. The India VIX, a measure of market volatility, surged 8.3% to 14.6, indicating heightened uncertainty. Analysts say the market may remain under pressure until there is clarity on the inflation trajectory and the RBI's future course of action.

Here is a snapshot of the key indices and sector performance on October 5, 2026:

Index	Closing Level	Change (Points)	Change (%)
BSE Sensex	74,512	-429	-0.57%
Nifty 50	22,603	-128	-0.56%
Nifty Bank	48,210	-585	-1.20%
Nifty Auto	19,845	-298	-1.48%
Nifty Realty	912	-20	-2.10%
India VIX	14.6	+1.12	+8.30%

Note: The above table is based on provisional closing data from the BSE and NSE. The Sensex and Nifty figures are indicative and may vary slightly. The rate hike by the RBI is expected to increase borrowing costs for corporates and consumers, potentially slowing down demand in the short term. However, analysts say that a decisive move to control inflation could be positive for the market in the long run, as it would lead to a stable macroeconomic environment.

Looking ahead, investors will closely watch the RBI's commentary, global cues, and the upcoming corporate earnings season. The rate hike may prompt foreign investors to reassess their positions in Indian equities, especially if the US Federal Reserve also adopts a hawkish stance. In the near term, analysts recommend a cautious approach, with a focus on large-cap stocks and sectors with pricing power. For more detailed analysis and updates on the Indian stock market, visit MarketToMoney.co.in.