Banks, RIL power Nifty's 1% rally ahead of RBI monetary policy decision

The Nifty rallied 1% on Wednesday, October 7, as banks and oil and energy shares supported a recovery before the RBI's monetary policy decision. Sentiment also drew support from crude trading below $100, expectations around quarterly earnings and a rebound from oversold conditions. Reliance Industries, however, ended at Rs 1,211.50, down 0.5% for the day. It has fallen 7.5% over one month and 7.4% over three months, and remains 24% below its 52 week high. The banks sector is down 4.2% in one month and 3.8% over three months, while oil and energy is down 1.1% and up 0.7%, respectively.

The move matters because RBI policy signals can affect bank funding costs, lending rates, margins and expectations for credit demand. Banks could therefore remain the clearest domestic transmission channel. Crude below $100 may ease inflation and input cost concerns, supporting rate sensitive sectors and some oil and energy businesses, although the effect within the sector can vary by business model. Reliance Industries is directly exposed to energy conditions, but its 0.5% decline shows the index rally was not uniform. Confirmation would come from the RBI decision, sustained crude levels below $100 and supportive quarterly results. A firmer crude trend, disappointing earnings or an adverse policy surprise would weaken the reading.