Perspective on RBI MPC Announcement by Karthick Jonagadla, Investment Manager on smallcase and Founder and CEO at Quantace Research
Below the Perspective on RBI MPC Announcement by Karthick Jonagadla, Investment Manager on smallcase and Founder and CEO at Quantace Research
RBI Pause, Benign CPI: Mild Risk-On for India Equities; Banks/NBFCs/Housing Lead
RBI’s neutral pause at a 5.50% repo, alongside a sharper FY26 CPI cut to 2.6% and 6.8% GDP projection, signals policy stability and benign inflation—typically a mildly risk-on setup for Indian equities, especially duration- and rate-sensitives (banks, NBFCs, housing, capital-market plays).
Liquidity should stay well-anchored under the clarified framework that aims to keep the WACR within the corridor via calibrated variable-rate operations—supportive for short rates, transmission, and risk assets.
Credit-enabling regulatory moves—permitting bank acquisition finance, easing lending against listed securities, and phasing ECL/Basel III to 2027—expand fee and secured-lending levers, aiding capex and market activity.
System resilience remains a tailwind: bank fundamentals are strong (CRAR ~17.3%, GNPA ~2.3%, NNPA ~0.5%; LCR comfortably >100%), undergirding valuations and credit appetite.
That said, RBI flags tariff/trade headwinds, possible H2 FY26 growth moderation, and a Q4 CPI lift from base effects—tempering near-term euphoria; two MPC members preferred a shift to “accommodative,” but the Committee stayed neutral, keeping a measured, data-dependent tone.
From an Indian investor’s lens: accumulate quality banks, select NBFCs/HFCs, developers, and capital-market plays on dips, while retaining hedges for external shocks.
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