Nifty Bank Surges After RBI Keeps Repo Rates Unchanged: What It Means for Indian Investors
The Nifty Bank index surged to its day’s high after the RBI Governor Sanjay Malhotra maintained the repo rate at 5.5% and retained the stance at ‘neutral.’ The index rose as much as 0.78% to levels above 55,000.
Key Drivers of the Nifty Bank Index
The gains of the index were supported by gains in counters like Kotak Mahindra Bank and ICICI Bank, that gained over 1%. Other names in green included, HDFC Bank, Axis Bank and AU Small Finance Bank.
Losers of the Day
The names dragging the index were IDFC First Bank, IndusInd Bank and SBI. The Nifty PSU Bank had slipped into red ahead of the MPC and continued to trade with losses after the decision.
Nifty Financials Trading in Green
Nifty Financials were trading in green with insurance players like REC, PFC leading the pack on the back of Malhotra’s proposal during the MPC meet.
RBI’s Proposal for Risk-Based Insurance Premiums
He said that the Central Bank is set to introduce risk-based insurance premiums to incentivize risk for banks.
RBI’s Monetary Policy Committee Decision
The Reserve Bank of India’s Monetary Policy Committee, led by RBI Governor Sanjay Malhotra, retained the benchmark repo rate at 5.5%, after front-loading the three rate cuts in February, April and June this year. However, the RBI revised the CPI inflation forecast downward while revising the GDP growth forecast upward.
Space for Monetary Action Opens Up
Space for monetary action has opened up, Malhotra said, adding that the MPC considers it prudent to wait before beginning to cut rates further.
Macroeconomic Conditions and Outlook
Amidst benign inflation, prevailing global uncertainties and tariff-related developments are likely to decelerate growth in H2:2025-26 and beyond, stated the resolution of the MPC. ‘The current macroeconomic conditions and the outlook have opened up policy space for further supporting growth,’ it stated.
RBI’s Inflation Forecast
The RBI revised the inflation forecast from 3.7% in June to 3.1% in August to 2.6% in October. CPI inflation is projected at 1.8% for Q2 and Q3, 4% for Q4, and 4.5% for Q1 next year.
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