Indian equity markets closed the week of August 3–7, 2026 with their second consecutive weekly gain, as the Nifty 50 added 187 points, or 0.77%, to finish at 24,570, while the Sensex settled near 78,500. The headline advance, however, understated a genuinely volatile week beneath the surface — one shaped by the Reserve Bank of India's closely watched August policy decision, the debut of the National Stock Exchange's new Closing Auction Session mechanism, and a fresh bout of Iran-linked crude oil volatility that rippled through sentiment across sectors from aviation to information technology.
The week's defining event was the RBI's Monetary Policy Committee decision on Wednesday, August 5, when the central bank unanimously voted to hold the repo rate at 5.25% while maintaining a neutral stance. Governor Sanjay Malhotra cited heightened global uncertainty — Iran-linked crude volatility, an uneven southwest monsoon under El Niño conditions, and broader global trade uncertainty — as the rationale for holding rather than cutting. Crucially, the committee simultaneously upgraded its FY27 GDP growth forecast to 6.7%, from 6.6% previously, and cut its CPI inflation forecast to 5%, from 5.1%. That combination — a hold paired with an upgraded growth outlook and a lowered inflation projection — read as constructively as markets could reasonably have hoped for short of an outright rate cut.
The week's trading sessions told a story of their own. Monday, August 3 delivered the week's strongest single-day performance: the Nifty surged 391 points, or 1.60%, to 24,774, while Bank Nifty gained 983 points, or 1.72%, to 58,248, as Brent crude eased sharply below $85 a barrel and triggered broad-based buying across sectors. Nifty IT was the standout, surging 3.28% in its best single-day performance in three weeks, led by TCS, Infosys and Axis Bank, while aviation stocks including IndiGo rallied directly on the back of lower fuel-cost expectations tied to cheaper crude.
That momentum reversed sharply on Tuesday, August 4, as profit-booking set in ahead of the RBI's policy announcement: the Nifty fell 159 points, or 0.64%, to 24,615, while the Sensex shed 210 points, or 0.27%. Fifteen of sixteen major sectoral indices closed lower that day, with only metals — led by Hindalco — bucking the trend. The session also marked the first full trading day under NSE's newly implemented Closing Auction Session, a market-structure change that replaced the exchange's previous 3:30 pm closing mechanism with a separate post-market auction window for F&O-eligible stocks, in which buy and sell orders are matched to determine the official closing price. The new mechanism produced a notable, unusual divergence between intraday and closing prices, and traders spent much of the week visibly recalibrating to the altered dynamics.
Wednesday's RBI decision, as noted, produced a near-flat close for the Nifty, up just 0.04% to 24,625, with Nifty Realty and Nifty Auto gaining while banking stocks lagged; India's volatility gauge, the VIX, eased 3.12% to 12.01, a constructive signal that markets were not pricing in additional near-term shocks. Thursday, August 6 belonged decisively to public sector banks: the Nifty PSU Bank index surged 2.2%, the best-performing sector of the week, as investors re-rated state-owned lenders on the view that a rate pause supports stable net interest margins. State Bank of India, Bharat Electronics and Reliance Industries led Nifty gainers that day, while PowerGrid, Tata Steel and Bajaj Auto declined. Institutional flows on the day were notably lopsided: foreign institutional investors were roughly flat, net selling a marginal ₹0.27 crore, while domestic institutional investors bought a robust ₹4,013.60 crore, the single largest daily DII inflow of the week.
