India’s equity market is showing signs of a pullback after facing a brutal selling spree for eight straight sessions.
Following the outcome of the latest RBI’s monetary policy committee (MPC) meeting and dovish tone of its members, the market broke its losing streak with the benchmark indices - BSE Sensex and NSE Nifty - gaining about 1% each during the week.
The Nifty settled the Friday session at 24,894.25 and the Sensex at 81,207.17.
“The RBI’s policy decision was the central highlight of the week,” said Ajit Mishra – SVP, Research, Religare Broking. The MPC kept the repo rate unchanged at 5.5% for the second consecutive meeting, while revising the FY26 GDP growth projection upward to 6.8% and lowering its inflation forecast.
On the positive side, GST collections rose 9.1% year-on-year to Rs 1.89 lakh crore in September, highlighting resilient consumption trends.
“The market enters the new week with cautious optimism. The RBI’s supportive policy stance and strong GST collections offer domestic comfort, though volatility could persist due to FII outflows and global headwinds. Investors should closely track Q2 earnings, particularly from IT and banking heavyweights, for cues on sectoral leadership. A buy-on-dips strategy remains advisable, with a preference for domestic cyclicals such as metals, autos, financials, and themes like defense, while selectively adding from other sectors,” stated Mishra.
The rebound was broad-based, with all major sectors ending in positive territory. Metals led the rally, climbing nearly 4% on firm global cues, followed by banking and financials, which advanced between 1.6% and 2.2%. Primary market activity is set to remain strong this week, with large IPOs from Tata Capital and LG Electronics lined up.
Sudeep Shah, Head- Technical and Derivatives Research at SBI Securities that the recovery in the last two trading sessions added to the optimism, hinting at a possible continuation of the pullback rally. Shah added that a major catalyst for this move was the Bank Nifty, which delivered a strong performance, surging over 2% and forming a sizeable bullish candle on the weekly chart.
Notably, frontline banking stocks such as Kotak Mahindra Bank, Axis Bank, and HDFC Bank were key contributors to this rally, driving sectoral leadership and investor confidence.
In addition, the Nifty IT index, which had been undergoing a corrective phase, showed signs of stabilisation.
“However, for the current rebound to gain meaningful traction, a decisive follow-up move in the coming week is essential. Sustained buying interest across key sectors—especially in banking and large-cap names—will be crucial to confirm the strength of this recovery and avoid another phase of consolidation or profit booking,” said Shah.
Meanwhile, foreign institutional investors (FIIs) continue to remain net sellers. In September 2025, FIIs withdrew about Rs 35,301 crores from Indian equities, continuing their multi-month exit streak.
In July & August, FIIs dumped over Rs 94,570 crore in Indian stocks, pressured by stretched valuations, weak earnings, and global uncertainties. On the flip side, DIIs have been stepping in aggressively. In the last three months, the net inflows from the DIIs stood at Rs 2,21,111 crore.
VK Vijayakumar, Chief Investment Strategist, Geojit Investments said that the selling in September takes the total sell figure for 2025 to Rs 198103 crore. This massive selling on top of the Rs 121210 crore selling in 2024 takes the total FII selling to Rs 319313 crores for the last 21 months.
“It is important to understand that the FII strategy of selling in India and moving the money to other markets have paid rich dividends to FIIs since India has been underperforming most markets during the last one year with one-year retun in negative territory. Higher valuation in India and cheaper valuations elsewhere have been the principal drivers behind the FII strategy,” added Vijayakumar.