Stock Market Outlook: Sensex, Nifty's Bullish Momentum Likely to Continue Post-RBI Policy Amid Festive Demand

Indian equity markets are poised for a positive start on Friday as investors return from a brief holiday break with renewed confidence following strong gains earlier in the week. The Sensex and Nifty ended on a high note on October 1, bolstered by the Reserve Bank of India's (RBI) decision to maintain the benchmark repo rate at 5.5% and announce market-friendly reforms.

Stock Market Outlook Today For October 3, 2025

All signs point toward a continuation of bullish momentum when markets reopen on October 3 after the Dussehra and Gandhi Jayanti holidays. With strong technical indicators, supportive macroeconomic data and a dovish central bank, Nifty and Sensex are expected to trade with a positive bias, with key resistance levels in sight.

According to Bajaj Brokerage, "On October 1st, Indian equities ended on a strong note, with the Nifty closing near 24,850 as markets digested the RBI's policy decision to keep the repo rate unchanged at 5.5%." The broader market sentiment improved significantly, with the Sensex gaining 715.69 points (0.89%) to close at 80,983.31, while the Nifty rose 225.20 points (0.92%) to end at 24,836.30.

The RBI's decision not only signaled stability but also came with a slew of reforms aimed at deepening the capital markets and easing borrowing norms. "Sentiment was further buoyed by the central bank's proposals on capital market lending and banking operations," the brokerage added. Measures such as the expansion of capital market lending, removal of lending caps against listed securities, and enhanced borrower flexibility have been welcomed by investors and institutions alike.

Nifty Prediction Today: Bullish Reversal Confirmed

The technical picture for the Nifty appears increasingly optimistic. As per Bajaj Brokerage's technical analysis, "On the daily chart, a long bullish candle emerged after several sessions of range-bound action with a weak bias, suggesting a potential short-term bottom reversal." The index rebounded sharply from the 24,400-24,500 support zone, reinforced by the ascending trendline and 200-day EMA.

"The short-term trend turned decisively bullish on Wednesday," the report noted, adding that a new higher low has been established at 24,587, supporting the continuation of the higher high-higher low formation. Resistance is expected around 25,000 and 25,200, with support seen at 24,600, giving traders a clear range to monitor.

Bank Nifty Prediction Today: Buy-on-Dips Strategy Favored

Financials were among the key drivers of Wednesday's rally, and the Bank Nifty showcased particular strength. Bajaj Brokerage stated, "The formation of a bullish Marubozu candle signals a strong and positive start to the month, underpinned by heavy buying interest in major private sector banks." Currently trading above both its 21- and 50-day EMAs (54,940 and 55,120 respectively), the index is positioned for a continued uptrend.

Immediate resistance levels are placed at 55,480 and 55,800, while fresh support has shifted higher to 54,800-55,000, suggesting a favorable risk-reward setup. Technical indicators on the hourly chart also back a buy-on-dips approach.

Macro Tailwinds Support Rally

Reinforcing the bullish outlook, Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, observed, "Indian equity markets staged a strong rebound after eight consecutive sessions of decline, with the Nifty50 closing 225 points higher at 24,836 (+0.9%). Banking and financial stocks led the upmove... supported by the RBI's dovish stance that hinted at future rate cuts."

The RBI also lifted its FY26 GDP forecast to 6.8% (from 6.5%) and cut its inflation estimate to 2.6%, adding to the optimism. NBFC stocks rallied 3-5% following regulatory changes aimed at easing infrastructure financing - a move that could spur fresh capex cycles and credit growth in the months ahead.

Stocks in Focus Today: Sectoral Trends and Market Drivers Ahead

Beyond banking, sectors like realty, IT, pharma and media also saw strong interest, advancing 1-4%, while PSU banks saw modest declines due to profit-booking. With India witnessing its best monsoon in five years (8% above the LPA), auto and FMCG sectors are also expected to gain on the back of rural demand and GST rate cuts.

Investors will closely watch September auto sales data, expected to trickle in over the next few days, for cues on consumption momentum during the festive season.

Khemka added, "We expect positive momentum to sustain on Friday, supported by an accommodative monetary policy, favourable monsoon season and festive-led boost in demand."

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