Indian shares muted ahead of crucial RBI policy decision

Indian shares ended flat on Thursday as escalating U.S.-Iran hostilities and conflicting truce signals kept investors cautious ahead of a high-stakes central bank meeting, with war-fuelled inflation risks high on policymakers’ minds.

The benchmark Nifty 50 ended up 0.05% at 23,416.55, while the BSE Sensex gained 0.02% to 74,360.01.

The indexes have lost 2.6% and 2.8%, respectively, over seven sessions.

The Reserve Bank of India is forecast to hold its key rate at 5.25% on Friday, according to a Reuters poll, though most economists expect a hike by year-end, as inflation and heavy foreign outflows pressure the economy and the rupee.

“We expect the RBI to hold rates steady, while signaling readiness to respond, should inflation risks intensify and second-round pressures begin to emerge,” Madhavi Arora of Emkay Global Financial Services said.

Thirteen of the 16 major sectors logged gains on Thursday. The broader small-caps and mid-caps rose 0.5% each.

Heavyweight financials rose 0.3% in their second session of gains, while IT stocks lost 0.3%.

Brent crude remained elevated near $96 a barrel, while Asian markets fell 1.9%.

Escalating U.S.-Iran tensions sapped sentiment after Iran struck Kuwait’s airport and the U.S. launched retaliatory strikes near the Strait of Hormuz, overshadowing a U.S.-brokered Israel-Lebanon ceasefire.

Among stocks, edtech major Physicswallah surged 15.7% after scrapping plans to lend directly to students and opting to partner with regulated non-bank lenders instead.

Grid equipment makers Hitachi Energy, GE Vernova T&D, CG Power rose 2.4%-4.3% after Citi started coverage with “buy” ratings and Street-high price targets.

Integrated petrochemical company Agarwal Industrial Corporation climbed 20% after securing a $49 million bitumen supply order from HPCL.

Rajesh Exports lost 5% after the markets regulator barred the firm and its owner, alleging it inflated revenue by 15.15 trillion rupees ($158.30 billion) through unverified overseas entities. The company denied the allegations.