The Reserve Bank of India (RBI) is scheduled to hold its Monetary Policy Committee (MPC) meeting from December 3-5. Analysts are divided over whether the central bank will cut rates, but experts have assessed potential impacts on Indian equities. In its last meeting on October 1, the RBI kept the benchmark repo rate unchanged at 5.5% for the second consecutive time, after cutting a total of 100 basis points in the first half of 2025. Following the October decision, markets responded positively, with the Sensex rising over 700 points to 80,983 and Nifty 50 gaining 225 points to 24,836.
RBI Governor Sanjay Malhotra recently indicated that there is room to lower policy rates, although the MPC will ultimately decide whether to act. Analysts have speculated a 25-basis point cut in the upcoming meeting.
A rate cut is expected to boost Indian equities in the short term by lowering borrowing costs, encouraging credit growth, and supporting earnings, particularly for sectors like real estate, autos, and financials. Even if rates are held, it would signal confidence in economic growth and maintain market stability.
