Global stock markets remain under pressure as expectations of further interest rate increases and renewed geopolitical tensions in West Asia weigh on investor sentiment. Reports suggesting possible fresh US military action against Iran have added to uncertainty, while crude oil prices remain above $100 a barrel.
Wall Street recovered substantially from its intraday lows on Wednesday but still ended in negative territory. Asian markets were trading lower on Thursday morning, indicating another difficult session for Indian equities.
Gift Nifty, which closed at 22,557 in Tuesday night's derivatives trading, slipped to around 22,535 in early Thursday trade before recovering. The movements indicate a weak opening for the Indian stock market.
The Reserve Bank of India raised its benchmark repo rate by 25 basis points to 5.50% from 5.25% on Wednesday, October 7, marking its first increase in 44 months.
The repo rate is the interest rate at which the RBI lends short-term funds to commercial banks. Changes in this rate influence borrowing costs, credit demand and liquidity across the financial system.
The Monetary Policy Committee (MPC) unanimously approved the rate increase and shifted its policy stance from neutral to calibrated tightening.
RBI Governor Sanjay Malhotra indicated that further monetary tightening could be necessary if inflationary pressures persist. The change in policy stance has strengthened expectations of additional rate increases in subsequent MPC meetings.
The central bank also revised its economic growth and inflation projections.
FY2026-27: 7.1% (earlier 6.7%)
Second quarter: 7.2% (earlier 6.4%)
Third quarter: 6.9% (earlier 6.5%)
Fourth quarter: 6.8% (unchanged)
FY2026-27: 5.2% (earlier 5.0%)
Second quarter: 4.9% (earlier 4.7%)
Third quarter: 6.0% (earlier 5.9%)
Fourth quarter: 5.7% (earlier 5.5%)
The rate increase could gradually translate into higher borrowing costs for consumers and businesses. Interest rates on new vehicle and personal loans may rise, while borrowers with floating-rate home loans could face higher EMIs or longer repayment periods.
On the positive side, depositors could benefit if banks raise interest rates on new fixed deposits.
Geopolitical uncertainty continues across West Asia, Yemen and Ukraine. Indirect negotiations between the United States and Iran are reportedly continuing through Qatar. However, reports suggesting that US military commanders in West Asia have been instructed to prepare for another round of strikes against Iran before November have heightened market concerns.
Although crude oil shipments have recovered towards pre-conflict levels, prices remain elevated because of continuing security risks, higher tanker costs and increased Chinese purchases.
Reports indicate that compensation for some oil tanker captains operating on high-risk routes has surged to as much as $100,000 a month, with voyage bonuses reaching $50,000.
Disruptions to refinery operations have added to supply concerns. More than half of Russia's refining capacity has reportedly been affected, while refineries in Iran, Saudi Arabia and other Gulf countries continue to operate below normal capacity.
These disruptions have tightened global supplies of diesel and other petroleum products, contributing to higher fuel prices.
US equities reduced their losses considerably during Wednesday's session, although all three major indices finished in negative territory.
The Dow Jones Industrial Average, which had fallen more than 600 points intraday, recovered to close with a loss of around 341 points.
Concerns about higher interest rates weighed on banking stocks, while US Treasury yields remained elevated.
The yield on the benchmark 10-year Treasury climbed to around 5.35% before easing after strong demand for a $39 billion Treasury bond auction.
The securities were reportedly sold at a yield of around 5.3%, among the highest levels since 2000.
Shares of Levi Strauss declined after the apparel company lowered its outlook despite reporting better-than-expected quarterly earnings. SpaceX shares also retreated following gains in previous sessions.
US market closing levels
Dow Jones: 51,179.87 (−341.41 points, −0.66%)
S&P 500: 7,801.77 (−17.16 points, −0.22%)
Nasdaq Composite: 27,538.69 (−61.20 points, −0.22%)
US stock futures showed mixed movements in early Thursday trading.
Dow futures: −32 points (−0.06%)
S&P 500 futures: +2 points (+0.02%)
Nasdaq futures: +36 points (+0.11%)
Indian American Depositary Receipts (ADRs) were largely subdued in New York.
HDFC Bank declined 1.25% during regular trading but recovered 0.27% in extended trading to $22.20.
ICICI Bank fell 0.57% during regular trading and remained unchanged in the extended session at $27.86.
Infosys was largely flat during regular trading before slipping 0.19% to $10.53 in extended trading.
Wipro lost 0.60% during the regular session and declined a further 0.24% to $1.666 in after-hours trading.
European equity markets fell more than 1% on Wednesday, with declining bond prices and rising borrowing costs emerging as major concerns for investors.
The prospect of further monetary tightening and elevated government bond yields continued to weigh on sentiment.
Asian stock markets opened lower on Thursday as investors assessed the possibility of further monetary tightening and continuing geopolitical risks.
Japan's Nikkei declined around 1%, while South Korea's Kospi slipped 0.40%.
Australia's benchmark index lost 0.70%, and Taiwan's market fell 0.75%.
Hong Kong's Hang Seng declined 0.40%, while the Shanghai Composite edged down 0.10%.
Indian benchmark indices ended lower on Wednesday as investors reacted to the RBI's move towards tighter monetary policy.
Although the 25-basis-point repo rate increase was widely expected, indications that further hikes could follow prompted selling across several sectors.
Metals, automobiles, information technology, real estate, consumer durables and defence stocks faced pressure. Public sector banks and media stocks were among the few sectors to register gains.
Market breadth remained negative.
On the BSE, 1,936 stocks advanced while 2,459 declined. On the NSE, 1,540 shares gained against 2,033 that ended lower.
Foreign institutional investors (FIIs) continued their selling, offloading Indian equities worth a net ₹6,121.37 crore in the cash market.
Domestic institutional investors (DIIs) provided some support, making net purchases of ₹4,596.57 crore.
Indian market closing levels
October 7, 2026 (Wednesday)
Sensex: 72,638.70 (−429.11 points, −0.59%)
Nifty 50: 22,603.05 (−173.05 points, −0.76%)
Bank Nifty: 55,055.55 (−72.85 points, −0.13%)
Nifty Midcap 100: 59,382.60 (−378.60 points, −0.63%)
Nifty Smallcap 100: 19,506.95 (+58.25 points, +0.30%)
The decline reflected growing concerns that prolonged high interest rates could affect credit demand, corporate earnings and equity valuations.
Gold prices recovered in early Thursday trading after suffering a sharp decline on Wednesday. The precious metal fell $53.40, or 1.28%, to close at $4,111.90 per troy ounce.
Prices had dropped to around $4,065 following indications in the US Federal Reserve's meeting minutes that another interest rate increase could be considered in December.
However, buying at lower levels helped gold recover part of its losses. By Thursday morning, gold had gained around 0.55% to reach $4,135 an ounce.
In Keralam, the price of 22-carat gold fell ₹480 per pavan on Wednesday to ₹1,09,680.
Silver also recovered after falling to $59.92 an ounce, rising to $60.21 in early trading.
Gold: $4,135 per ounce
Silver: $60.21 per ounce
Platinum: $1,632 per ounce
Palladium: $1,111 per ounce
Rhodium: $8,250 per ounce
International natural rubber prices continued to rise, with gains also reported in the domestic market.
In Bangkok, RSS-1 rubber reached $291.35 per quintal on Wednesday, while RSS-3 rose to $288.10. In Keralam, RSS-4 rubber climbed to ₹28,150 per quintal, providing some support to growers amid volatile commodity markets.
Industrial metal prices showed mixed trends on Wednesday.
Copper edged up 0.04% to $14,508.85 a tonne, while aluminium declined 1.08% to $3,113.
Lead and nickel registered gains, whereas zinc and tin moved lower.
The mixed performance reflected uncertainty surrounding industrial demand, global growth and monetary policy.
Agricultural commodities remained under pressure.
Cocoa futures fell 2.07% to close at $5,582 a tonne.
Arabica coffee declined 3.86% to $2.927 a pound, while palm oil slipped 0.74% to 4,524 Malaysian ringgit a tonne.
The US dollar strengthened as investors assessed the possibility of additional Federal Reserve rate hikes.
The dollar index rose to 102.24 on Wednesday and moved further up to 102.28 in early Thursday trading.
The euro weakened to $1.1198, while the British pound fell to $1.3206.
The Japanese yen traded around 151.81 against the dollar, while the Chinese yuan remained near 6.70 per dollar.
Meanwhile, the yield on the benchmark US 10-year Treasury eased to 5.299% in early trading.
The Indian rupee continued to depreciate on Wednesday, with the US dollar gaining 35 paise to close at ₹96.77.
During the session, the dollar climbed as high as ₹96.85.
The rupee's weakness persisted despite RBI Governor Sanjay Malhotra's assessment that the currency was trading below levels justified by underlying economic fundamentals.
In the offshore forward market on Thursday morning, the dollar initially rose to ₹96.84 before easing to ₹96.81.
The Chinese yuan strengthened to ₹14.43, while the euro declined to ₹108.40.
A stronger dollar, persistent foreign portfolio outflows and elevated crude oil prices continue to place pressure on the Indian currency.
Crude oil prices moved higher again after approaching $100 a barrel on Wednesday. Brent crude gained around 1.5% in early Thursday trading to reach $101.73 a barrel.
West Texas Intermediate (WTI) crude traded near $89.38 a barrel.
Continuing tensions in West Asia, elevated tanker costs and disruptions to refinery operations have kept oil markets volatile.
High crude prices remain a major concern for India, which depends heavily on imported petroleum. Sustained increases could affect inflation, the trade deficit and the rupee.
Major cryptocurrencies traded lower in early Thursday dealings.
Bitcoin slipped below $83,300, while Ether fell below $2,585.
Solana also weakened, trading below $117.
The decline reflected cautious investor sentiment towards riskier assets amid higher bond yields and geopolitical uncertainty.
(October 7, Wednesday)
Sensex: 72,638.70 (−0.59%)
Nifty 50: 22,603.05 (−0.76%)
Bank Nifty: 55,055.55 (−0.13%)
Nifty Midcap 100: 59,382.60 (−0.63%)
Nifty Smallcap 100: 19,506.95 (+0.30%)
Dow Jones: 51,179.87 (−0.66%)
S&P 500: 7,801.77 (−0.22%)
Nasdaq Composite: 27,538.69 (−0.22%)
US dollar: ₹96.77 (+₹0.35)
Gold (ounce): $4,111.90 (−$53.40)
Gold (pavan): ₹1,09,680 (−₹480)
Brent crude: $100.20 (−$0.38)
