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

Markets eye 25 bps cut as RBI MPC meet nears

Investor Sentiment Turns Upbeat on RBI Rate Cut Hopes

Market momentum has gained fresh impetus as investors anticipate an early rate cut by the Reserve Bank of India (RBI), bolstered by a stronger-than-expected GDP print.

A Pivotal December Ahead

Traders are positioning themselves ahead of the RBI’s upcoming policy decision, which could have a significant impact on the trajectory of equities through the new year.

The RBI Monetary Policy Committee (MPC), chaired by RBI Governor Sanjay Malhotra, is set to meet from December 3 to 5.
The central bank will announce its repo rate decision on December 5, following a steady rate of 5.5 per cent since August.

Market Expectations

Market experts broadly expect a 25-basis-point reduction in the repo rate, lowering it to 5.25 per cent.

"With a comfortable inflation trajectory in place, accompanied with robust GDP growth numbers expected 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

The optimism stems from the latest quarterly GDP numbers, which reaffirm India’s status as the world’s fastest-growing major economy.

Inflation staying within the central bank’s comfort zone.
Growth indicators improving.

Market Impact

A rate cut would lower funding costs, boost corporate profitability, and stimulate sectors sensitive to interest rates, particularly real estate, autos, and financials.

Market Conditions

Benchmark indices — Sensex and Nifty 50 — briefly slipped from record highs due to profit-booking and pressure on the rupee, but broader sentiment remains constructive.