Auto and consumer stocks declined by up to 1% each, while realty stocks shed 2.33%.
The Monetary Policy Committee (MPC) of the RBI unanimously decided to keep the benchmark repo rate unchanged at 5.5%, marking a pause after three consecutive rate cuts totaling 100 basis points in February, April, and June.
The Standing Deposit Facility (SDF) and the Marginal Standing Facility (MSF) rates were also left unchanged in line with the policy stance.
During the previous policy meeting in June, RBI Governor Sanjay Malhotra had said that, having frontloaded rate cuts, the committee believed there was limited policy space left to support growth.The central bank also retained its policy stance as “neutral”, maintaining the position it adopted in June, after briefly shifting to an “accommodative” stance in April. The decision to maintain a neutral stance was unanimous.
In his post-policy remarks, Governor Malhotra said the Indian economy is well-positioned in a changing global landscape, adding that coordinated tools have aided faster monetary transmission.
The RBI kept its full-year GDP growth forecast unchanged at 6.5%, with Q1 and Q2 projections at 6.5% and 6.7%, and Q3 and Q4 estimates at 6.6% and 6.3%, respectively.
It also lowered its Consumer Price Inflation (CPI) forecast for the full financial year to 3.1% from 3.7%. The inflation projection for Q2 was cut to 2.1% from 3.4%, and for Q3 to 3.1% from 3.9%. The Q4 estimate was retained at 4.4%.
However, due to an unfavorable base effect, inflation for the first quarter of FY27 is expected to rise to 4.9%.
“The policy meeting outcome was in line with expectations regarding the repo rate. We now anticipate a 25 bps rate cut in the upcoming October meeting. Earlier, we had estimated the terminal policy rate for FY26 at 5%. However, given the sharp downward revision in RBI’s inflation forecast, we are revising our view to 4.75%,” said Debopam Chaudhari, Chief Economist at Piramal Group.
