If you thought the India-US trade deal rally was a one-way ticket to the moon, today’s price action was a cold shower for your portfolio. The truth is, while the 1,200-point explosion was historic, the “Common Man” investor is now facing the reality of a “Buy the Rumor, Sell the News” cycle as the Nifty slipped 94 points to trade below the critical 25,650 support level.
The Shocking Stall: Why the Nifty is Bleeding Today
The morning of February 5, 2026, started with a whimper rather than a roar. After a three-day rally that added trillions to market cap, the Sensex dropped over 270 points and the Nifty fell toward 25,640.
Why the sudden reversal? Here is the catch: it’s not just about one factor. It’s a “Perfect Storm” of a tech rout on Wall Street (Nasdaq fell 1.5%), a 6% crash in Hindustan Aeronautics (HAL) due to project bidding uncertainty, and a massive wave of Pre-Policy Caution. Traders are suddenly realizing that the “Goldilocks” scenario of the trade deal might not be enough to force the RBI’s hand.
Market Mood Check: The “Euphoria” vs. The “Policy Fear”
| Metric | Post-US Deal (Feb 3) | Pre-RBI Policy (Feb 5) | Sentiment Shift |
| Nifty 50 Level | 25,776 | 25,681 (Low: 25,640) | Profit Booking |
| Sensex Status | 83,817 | 83,538 | Bearish Grip |
| India VIX (Volatility) | 12.25 (Cool) | Rising | Hedging Activity |
| Brent Crude | $70/barrel | $68.02 (Down 2%) | Global Slowdown Fears |
How the “Status Quo” Fear is Triggering the Sell-Off
The Reserve Bank of India (RBI) is currently in the second day of its three-day Monetary Policy Committee (MPC) meeting. The verdict is due tomorrow, Friday, February 6.
1. The “Wasted Bullet” Theory
Analysts are increasingly whispering that Governor Sanjay Malhotra will maintain a “Status Quo” on interest rates. The logic? Growth is robust (thanks to the trade deal) and the Budget was fiscally prudent. Experts like those at PwC suggest that cutting rates now would be “wasting a bullet” that might be needed later if global geopolitical tensions flare up.
2. The “Higher for Longer” Nightmare
While the “Smart Money” was hoping for a 25-bps rate cut to celebrate the lower US tariffs, the reality is that food inflation remains a sticky ghost. If the RBI maintains the repo rate at 5.25% and keeps a “Neutral” but cautious stance, the high-flying Bank Nifty could see another 1,000-point correction.
3. The Tech-AI “Double Whammy”
The Nifty IT index, which was already reeling from the Anthropic AI shock, is facing further pressure. When the RBI doesn’t cut rates, “Growth” stocks (like IT) usually underperform. The combo of AI disruption and a hawkish RBI is a “Warning” sign for IT bulls.
What the Analysts are Saying
The market consensus has shifted from “Aggressive Buying” to “Defensive Shell.”
- Sonal Varma (Nomura): “The Budget is growth-positive but neutral for inflation. We expect the RBI to keep the repo rate unchanged at 5.25% as they assess the impact of the new trade deals.”
- V.K. Vijayakumar (Geojit): “Nifty is facing stiff resistance at 25,800. The pre-policy sell-off is a sign that traders are de-risking in case the RBI Governor’s tone is more hawkish than expected.”
- Technical View: Analysts suggest that if Nifty fails to hold 25,640, the next stop is the 25,500 demand zone.
💡 Pro-Tip: The “Friday Gap” Strategy
Historically, the market overreacts before the RBI announcement. If the Nifty slides further today toward 25,550, it might create a “contrarian” buying opportunity for Friday—IF the Governor hints at a rate cut in the next cycle. Don’t go “All-In” today; keep cash for the post-policy reaction.
The Bottom Line
The slide below 25,650 is a classic “Pre-Policy Shakedown.” The market is sweating over whether the RBI will support the “Animal Spirits” of the India-US deal or act as a “Brake” to keep inflation in check. For the Retail Investor, the message is simple: the trade deal is the long-term “Secret Blueprint,” but the RBI is the short-term “Traffic Cop.” Stay patient until the Friday morning 10:00 AM speech.
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