Markets Commentary August 6: Defensive Stance Prevails as RBI Holds Rates, Trump’s Tariff Threats Loom

Mumbai, Aug 6, 2025: Domestic equities extended their losing streak for the second consecutive session on August 6, with the Nifty closing below the 24,600 level, weighed down by broad-based profit booking and a cautious investor sentiment. The index remained under consistent selling pressure throughout the day, reflecting a bearish bias, as the RBI’s Monetary Policy Committee (MPC) unanimously decided to maintain the repo rate at 5.5 percent and retained its policy stance as 'neutral’. At close, the Sensex was down 166.26 points or 0.21 percent at 80,543.99, and the Nifty was down 75.35 points or 0.31 percent at 24,574.20. Barring PSU Banks, which outperformed with gains of 0.6 percent, all other sectoral indices closed in negative territory, led by sharp drawdowns in IT, Media, Realty, Pharma, and FMCG, which declined in the range of 1–2 percent, reflecting sectoral rotation and risk-off sentiment. The broader markets bore the brunt of the sell-off, with both the Nifty Midcap and Small-cap indices shedding around 1 percent each, indicating profit booking across the broader spectrum.

Nifty Outlook

The index formed a second consecutive small bearish candle on the daily chart, marked by a lower high and lower low, indicating a continuation of the ongoing consolidation phase with a corrective bias, even as stock-specific activity remains prominent. Strong support for the index is seen in the 24,500–24,400 zone, which coincides with multiple technical indicators — including the previous swing low, the 100-day exponential moving average (EMA), and a key retracement level from the recent uptrend. From a structural standpoint, Nifty is likely to remain range-bound within the 24,400–25,000 band. A decisive break down below the 24,400-support level could pave the way for a further decline toward the 24,200 marks in the coming sessions.

Bank nifty Outlook

Bank Nifty formed a small bullish candle, which remained within the previous session’s price range, indicating ongoing consolidation amid stock-specific movements. The index is nearing a crucial support zone between 55,200 and 54,900 — a region that aligns with the 100-day exponential moving average (EMA) and key Fibonacci retracement levels from the prior upward move, making it a significant demand area. On the upside, resistance is seen in the 56,300–56,500 range, which corresponds to the lower boundary of the recent breakdown zone. A sustained move above this level would be an early indication of weakening bearish momentum or a potential pause in the current downtrend. Overall, the index is expected to trade within a defined range of 54,900 to 56,400 in the near term, with a clear directional move likely only after a decisive breakout from this range.

Global

On the global front, uncertainty persisted due to tensions from the US, highlighted by President Trump’s threat of imposing a steep 250% tariff on pharmaceutical imports, adding to the cautious sentiment.

Derivatives

In the derivatives market, the advance-decline ratio leaned bearish. Notable increases in open interest were seen in stocks like BOSCHLTD, UNOMINDA, BRITANNIA, BAJAJ AUTO, and CONCOR, reflecting a cautious and defensive market mood.

Attirbuted to Bajaj Broking and Ashika Institutional Equities