The Reserve Bank of India (RBI) Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, kept the repo rate unchanged at 5.5 per cent and maintained the policy stance as “neutral” in its latest meeting. This decision follows a surprise 50 basis points cut in June and signals a cautious approach amid an evolving global environment marked by easing inflation and resilient economic growth.
RBI noted the country’s growth outlook remains healthy and inflation is expected to be under control this year, largely due to a healthy monsoon. However, the RBI Governor pointed out that the global environment continues to be challenging.
“Although financial market volatility and geopolitical uncertainties have abated somewhat from their peaks in recent months, trade negotiation challenges continue to linger,” the central bank said.
While retail inflation is forecast to rise modestly in the final quarter of FY2026, headline Consumer Price Index (CPI) inflation estimates were revised downward to 3.1 per cent from 3.7 per cent earlier. The central bank also retained its real GDP growth forecast at 6.5 per cent for the year.
RBI Outcome Impact: Sensex, Nifty decline
Market reaction to the announcement was subdued, with the Sensex falling over 260 points and broader markets underperforming. The move, however, has important implications for investors seeking to navigate this period of monetary stability.
The BSE Sensex fell around 261 points to the day’s low of 80,448.82, while the Nifty50 was down 105 points to hit the lowest level of 24,544.15 in intraday deals today. Broader markets underperformed benchmark indices, with the Nifty Midcap and Nifty Smallcap indices down over 1.2 per cent each.
Takeaways For Investors From RBI MPC Decision
Market experts see the RBI’s decision as a positive sign for equities, especially domestic cyclicals. Anirudh Garg, Partner and Fund Manager at INVasset PMS, believes that the combination of a dovish inflation outlook, solid growth, and policy continuity creates a supportive environment for equities. “However, vigilance remains key, especially given potential imported inflation risks from global trade frictions,” he warns.
Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, recommends a selective investment approach, focusing on sectors such as financials, industrials, and consumption. These areas are expected to benefit from eventual monetary easing and possible fiscal stimulus ahead of the 2026 general elections.
Similarly, Anil Rego, Founder & Fund Manager of Right Horizons PMS, highlights that rate-sensitive sectors like banking, real estate, and automobiles could gain from the sustained accommodative stance.
“The RBI’s balanced tone supports growth without compromising inflation control, making it a favourable backdrop for these industries,” he adds.
- Stay selective and focused: Prioritise sectors likely to benefit from economic growth and future policy easing, especially financials, industrials, and consumer discretionary.
- Monitor global risks: Keep an eye on global trade tensions and supply chain developments that could trigger inflationary pressures.
- Long-term view: Embrace a strategic, long-term investment horizon amid monetary policy stability.
- Balance caution with opportunity: While the policy stance is neutral, the RBI’s flexibility signals readiness to act if needed, so be prepared to adjust portfolios accordingly.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
