Indian stocks rebound strongly as Asia firms; RBI decision holds the key to market momentum

Indian equity markets extended their recovery on Tuesday, 6 October 2026, with the benchmark indices closing firmly higher for a second consecutive session. The Sensex rose 0.95% to 73,067.81, while the Nifty 50 gained 0.98% to close at 22,776.10. The advance was broad-based, with financial stocks providing significant support and mid- and small-cap shares also outperforming the headline indices.

Market sentiment improved as investors responded positively to easing crude-oil prices, stronger global equity cues and encouraging quarterly business updates from several companies. Banking stocks were among the main contributors to the rally, while Trent was a notable outperformer following a strong business update. The broader market also remained positive, suggesting that buying interest was not limited to large-cap stocks.

The Indian market’s recovery was supported by gains across much of Asia. Japan’s Nikkei 225 advanced about 1.1% and moved above the 70,000 mark, while Hong Kong’s Hang Seng Index gained roughly 0.7%. Australia also ended higher. In contrast, South Korea’s Kospi declined around 0.9%, with weakness in technology-related stocks weighing on the index. Mainland Chinese markets remained closed for the National Day holiday and are scheduled to resume trading on 8 October.

The regional strength followed a positive overnight session on Wall Street, where technology shares helped the Nasdaq reach another record closing high. Easing oil prices also provided some relief to Asian markets, although elevated US Treasury yields continued to remain a concern for investors.

Compared with its Asian peers, India delivered a strong performance and remained among the better-performing major markets in the region. The Indian rally was supported by domestic factors in addition to the favourable global backdrop, particularly expectations surrounding the Reserve Bank of India’s monetary policy decision scheduled for Wednesday.

The rupee, however, remained under pressure and closed at around 96.42 against the US dollar. Currency weakness, continued foreign portfolio outflows and elevated global bond yields remain important risks for Indian equities.

Analysts say that Tuesday’s session reflected a clear improvement in investor sentiment, with Indian benchmarks recovering further from their recent correction and participating strongly in the broader Asian rebound.

“Today’s recovery was relatively broad, although sector performance remained uneven. Chemicals, pharmaceuticals, defence, FMCG, Oil & Gas and banking stocks led the advance, while IT stocks lagged. The mixed sectoral performance suggested that investors were selectively adding exposure rather than committing broadly to a sustained risk-on move,” said R Ponmudi, CEO at online trading and wealthtech firm Enrich Money.

The rupee and domestic bond yields remain important tests for the durability of the recovery, he said adding that the rupee continued to trade at elevated levels around ₹96.40 against the dollar, keeping currency-related concerns in focus.

“Any stabilisation in the rupee and bond yields could provide additional support to equities, while renewed pressure on either could constrain gains and revive selling interest,” Ponmudi said.

The immediate focus, however, now shifts to the RBI policy decision on Wednesday, with the tone of the central bank’s guidance likely to determine whether the recent recovery develops into a more sustained uptrend or remains a short-term rebound, the analysts say.

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