Investor sentiment turned upbeat on Monday as hopes of an early rate cut by added fresh momentum to the markets, already buoyed by the country’s stronger-than-expected GDP print.
December is shaping up to be a pivotal month, with traders positioning ahead of the RBI’s upcoming policy decision that could influence the trajectory of equities through the new year.
, chaired by RBI Governor Sanjay Malhotra, is scheduled to meet from December 3 to 5 and will announce its repo rate decision on December 5. The central bank has held the repo rate steady at 5.5 per cent since August, after cutting rates by a cumulative 100 basis points in the first half of the year.
Market experts broadly expect a 25-basis-point reduction in the repo rate, which would lower it to 5.25 per cent.
“With a comfortable inflation trajectory in place, accompanied with robust GDP growth numbers reported for Q2 FY26, we are of the view that the RBI has space to cut rates further by 25-bps in the upcoming policy meeting even now,” Ajit Banerjee, President and Chief Investment Officer, Shriram Life Insurance Company, said.
The optimism stems from the latest quarterly GDP numbers, which reaffirm India’s status as the world’s fastest-growing major economy. With inflation staying within the central bank’s comfort zone and growth indicators improving, markets are increasingly pricing in the possibility that the RBI may signal a shift toward monetary easing sooner than previously expected.
Such a move would lower funding costs, boost corporate profitability and stimulate sectors sensitive to interest rates, particularly real estate, autos and financials.
This macro backdrop has contributed to buoyant market conditions, even as benchmark indices — on account of profit-booking and pressure on the rupee. Broader sentiment, however, remains constructive.
With macro fundamentals aligning and policy hopes rising, the stage appears set for a potentially stronger market finish to the year.