Source : INDIA TODAY NEWS
Stock markets are expected to open higher on Friday as investors await the Reserve Bank of India’s monetary policy decision, which could offer fresh clues on the outlook for interest rates, inflation and the rupee.
The RBI’s Monetary Policy Committee (MPC) is scheduled to announce its policy decision at 10:00 am. While economists widely expect the central bank to keep the repo rate unchanged at 5.25%, market participants will closely watch Governor Sanjay Malhotra’s comments for signals on future policy action.
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GIFT Nifty futures were trading at 23,565.00 at 8:17 am, indicating that the benchmark Nifty 50 could open above its previous close of 23,416.55.
The policy announcement comes at a time when the RBI is balancing several challenges, including a weakening rupee, rising crude oil prices and inflation concerns linked to the ongoing conflict in the Middle East.
RBI POLICY DECISION IN FOCUS
According to a Reuters poll, the RBI is expected to leave the repo rate unchanged at 5.25%.
However, investors believe the policy statement and the governor’s commentary could be more important than the rate decision itself.
Markets will be looking for the RBI’s assessment of inflation risks, liquidity conditions, the rupee’s weakness and the impact of global developments on India’s economy.
The rupee has been under pressure this year and has emerged as Asia’s worst-performing currency in 2026. This has increased expectations that the central bank may discuss measures to support the currency while keeping inflation under control.
Higher interest rates can help strengthen a currency and reduce inflationary pressures. At the same time, they can increase borrowing costs for businesses and consumers, which may affect economic growth and stock market valuations.
RATE-SENSITIVE SECTORS TO REMAIN IN SPOTLIGHT
Investors are likely to keep a close watch on sectors that are most sensitive to interest rate movements.
Banking and financial stocks, automobile companies and real estate firms could see increased activity following the policy announcement.
Any change in the RBI’s tone on rates or liquidity could influence investor sentiment towards these sectors.
Gaurav Garg, Research Analyst at Lemonn Markets Desk, said the central bank is likely to maintain the status quo despite rising inflation concerns.
“We expect the RBI to maintain status quo on the repo rate in the upcoming MPC meeting. While recent developments such as higher crude prices, fuel price revisions, rupee weakness and geopolitical uncertainties have added to inflationary concerns, much of the current pressure appears to be supply-driven. In such an environment, the RBI is likely to remain watchful rather than react with immediate policy tightening,” he said.
Garg added that markets have already factored in the possibility of a pause.
“From a market standpoint, a pause is largely priced in and should help maintain stability across equity and fixed-income markets. More than the rate decision itself, investors will closely track the RBI’s commentary on inflation, liquidity, currency movements and global risks, as these factors will shape expectations around the future rate trajectory,” he said.
WHAT IT MEANS FOR HOMEBUYERS
The RBI’s decision is also important for the housing sector, where borrowing costs directly affect homebuyers.
Atul Monga, CEO and Co-Founder of BASIC Home Loan, said stability in interest rates would be welcomed by borrowers, especially first-time homebuyers.
“With inflationary pressures continuing to be driven largely by supply-side factors such as fuel prices, input costs and currency movements, we expect the MPC to adopt a balanced approach in its upcoming policy decision,” he said.
“For the housing sector, stability in interest rates remains important, as higher borrowing costs over the past few years have impacted affordability, particularly for first-time homebuyers in the affordable and mid-income segments.”
Monga said a stable policy environment and sufficient liquidity could help improve borrower confidence and support housing demand.
CRUDE OIL REMAINS A KEY CONCERN
One of the biggest concerns for policymakers remains the sharp rise in crude oil prices.
Brent crude futures have climbed 33% since the US-Israeli war on Iran began in late February.
For India, which is the world’s third-largest importer of crude oil, higher oil prices can significantly increase the import bill and add to inflationary pressures.
Rising fuel costs can also affect transportation, manufacturing and household budgets, making it more difficult for the RBI to balance growth and inflation objectives.
The recent increase in oil prices is one reason why investors will carefully examine the central bank’s outlook on inflation during the policy announcement.
FOREIGN INVESTORS CONTINUE TO EXIT
Concerns over rising oil prices, rupee weakness and global uncertainty have also weighed on foreign investor sentiment.
According to the data cited by Reuters, foreign investors have pulled out a record $28.2 billion from Indian equities so far this year.
The outflows come at a time when Indian markets are headed towards their first annual decline in more than a decade, according to a Reuters poll of equity analysts.
Against this backdrop, Friday’s RBI policy decision and Governor Malhotra’s comments could play an important role in shaping market sentiment in the near term.
While the consensus expectation is for rates to remain unchanged, investors will be looking beyond the headline decision to understand how the central bank plans to navigate rising inflation risks, pressure on the rupee and uncertainty in global markets.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
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SOURCE :- TIMES OF INDIA
