Policy▼ Bearish for Indian equities
RBI may continue liquidity absorption as it begins rate-hiking cycle
The brief
- Core liquidity surplus remains around ₹10 trillion
- Markets expect a 25-basis-point repo rate increase as the RBI begins a rate-hiking cycle
- Liquidity absorption and higher rates could weigh on Indian banks and rate-sensitive stocks
- Airlines urge govt to unlock delayed ECLGS funds
- Priming the market for a repo rate hike? RBI announces bigger VRRR auction
- RBI to hold Oct 6 overnight VRRR auction after absorbing ₹2.10 lakh crore
- Qatar Aims to Boost Liquidity in Local Bonds With Euroclear Deal
- RBI to conduct Second Overnight Variable Rate Reverse Repo (VRRR) auction under LAF on October 05, 2026
RBI’s October repo-rate decision
Economists and market participants expect the RBI to raise the repo rate by 25 basis points, from 5.25% to 5.5%, citing inflation risks and elevated crude prices. The MPC began its three-day policy meeting on October 5.
Monday, 5 October
- RBI may continue liquidity absorption as it begins rate-hiking cycle