Perspective on RBI MPC by Karthick Jonagadla, Investment manager on smallcase and Founder of Quantace Research
Below the Perspective on RBI MPC by Karthick Jonagadla, Investment manager on smallcase and Founder of Quantace Research
“December MPC: Cautious Easing, Structurally Tight – A Gift to PSU Banks
RBI’s 5 December MPC delivered exactly the kind of calibrated easing Indian markets were hoping for: a 25 bps cut to 5.25% with a neutral stance and unanimous vote, extending 2025’s cumulative easing to 125 bps while signalling that the cycle is gradual, not reckless. With October CPI near zero and FY26 inflation now projected around 2% alongside FY26 growth of ~7.3%, the ex-ante real policy rate sits near 3.25% – one of the tightest real-rate settings in any easing phase, by design. That high real carry, reinforced by roughly Rs.1 lakh crore of OMOs and a $5 bn USD/INR swap, anchors external confidence even as the rupee hovers around record-weak levels. For Indian investors, today’s reaction – softer 10-year yields, Nifty above 26,000, and broad gains in financials, autos, NBFCs and realty – confirms this as a “Goldilocks” cut: supportive for growth without threatening macro stability. For portfolios, our bias from here: accumulate 5–7 year G-secs and maintain an overweight in well-capitalised PSU banks and quality retail-credit franchises as the core expression of this easing cycle.”
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