US-Iran Conflict, RBI MPC Decision, SBI Q1 Earnings & More — The Week Ahead

The Indian equity market entered the week with the Nifty and Bank Nifty modestly higher, driven by a rally in large‑cap stocks. Investors are awaiting two key domestic events: the Reserve Bank of India's Monetary Policy Committee (MPC) meeting, where a rate hold is widely expected, and the announcement of new fixed‑deposit (FD) rules that could tighten banks' funding costs. At the same time, the US‑Iran conflict has resurfaced, adding a geopolitical risk factor that could affect global risk sentiment. SBI reported its Q1 earnings, contributing to the focus on banking sector performance. Overall market sentiment is described as a "Cautious Bull" with most sectors flat, while large‑cap financials such as Bajaj Finance are showing the strongest intraday upside.

A decision by the RBI to keep policy rates unchanged will reinforce the current market narrative of a cautious bull, keeping equity valuations stable for now. However, any hint of a hawkish stance or the introduction of tighter FD rules could increase banks' cost of deposits, compressing margins and triggering a sell‑off in banking stocks. Large‑cap financials such as Bajaj Finance are less exposed to deposit‑cost pressure and are benefiting from the broader large‑cap rally, making them attractive for short‑term trades. The ongoing US‑Iran conflict adds a layer of risk‑off sentiment globally, which can spill over into Indian markets if tensions flare. While Indian equities have so far remained resilient, a sudden escalation could trigger a broader market pullback, especially in risk‑sensitive sectors like banking and finance. Investors need to balance the immediate upside in large‑cap financials against the near‑term uncertainty from both domestic policy and international geopolitics.