RBI Monetary Policy Live Updates: Pranay Aggarwal Director & CEO of Stoxkart analyses RBI MPC verdict; ‘RBI Maintains Wait-and-Watch Approach as Inflation Takes Centre Stage’
”The RBI’s latest monetary policy reflects a clear ‘wait-and-watch’ approach with a temporary tilt toward inflation management. By unanimously keeping the repo rate unchanged at 5.25% and maintaining a neutral stance, the MPC has signaled that while India’s growth outlook remains resilient—with FY2026-27 GDP projected at 6.7%—it wants greater clarity on monsoon distribution, energy prices, and global geopolitical developments before considering any policy action,” said Aggarwal.
Although core inflation remains benign at 2.3–2.5% (excluding precious metals), headline CPI inflation is expected to peak at 5.9% in Q3 due to supply-side pressures in food and fuel. For equities, the policy largely reinforces a range-bound but constructively selective outlook. The rate pause was widely anticipated and therefore brings no negative surprises for the markets.
At the same time, steady economic growth and intact corporate demand drivers continue to support the broader earnings outlook. However, elevated inflation expectations for Q3 and persistent global volatility may limit sharp valuation re-ratings in the near term, keeping investor focus on sectors with strong margin visibility and lower input-cost sensitivity, including banking, domestic consumption, and infrastructure.
The RBI’s messaging suggests that inflation has become its immediate priority. Rising inflation projections—driven by adverse weather conditions linked to El Niño, volatile global energy markets, and supply disruptions—have prompted the central bank to prioritize anchoring inflation expectations. At the same time, resilient domestic activity, supported by investment, services momentum, and stable credit demand, provides sufficient room to maintain policy stability while focusing on inflation control.
From an FPI perspective, today’s policy is more of a confidence-building measure than a catalyst for fresh inflows. Previous policy decisions have shown that stable rates, a neutral stance, and inflation within the tolerance band do not automatically result in sustained foreign investment, even though India’s strong growth story remains well recognized by global investors.
”While July 2026 witnessed net FPI inflows, indicating improving foreign sentiment, sustained inflows over the coming quarters will depend not only on RBI policy but also on supportive government measures to strengthen market access and growth incentives, alongside favorable global liquidity conditions, particularly US bond yields and the Fed’s policy trajectory,” said the market analyst.
