RBI rate cut & stock market: Can MPC decision today lift Sensex, Nifty? What analysts say

RBI rate cut: Stock market is eyeing a 25 basis points rate cut in FY26's first MPC meeting today. Stock analysts noted that while the US is at risk of heightened inflation with tariffs on imports, with the FOMC keeping the benchmark rate unchanged in the range of 4.25 per cent to 4.5 per cent in its last meeting, for India the rate cut by the RBI could be benificial at this point.

Ajay Garg, CEO, SMC Global Securities said it would benefit India by making borrowing cheaper for individuals and businesses, leading to higher spending and investment. "Also, India is still at a benefit with a comparative advantage over the US tariff stance as compared to China, with an expectation of a shift of the supply chain to India. So, there is a possibility that the RBI will take the rate cut route with the benefit of lowering inflation and to offset the marginal impact of US tariffs on India’s economic growth," he said.

Emkay Global said the swift shift in global sentiment, high market volatility, and fear of global recession amid the tariff shock cemented its conviction of a 25bps cut, with possible change in stance to 'accommodative' to give directional easing bias. 

"The fluid global dynamics will require the RBI to be nimble in managing any risk of tighter financial conditions, especially as the shock to sentiment/capital flows is likely to require higher risk premia from EMs. While the extent of trade war pain is unclear, monetary policy may have to do the heavy lifting in India," it said.

The brokerage said FY26 growth and inflation risk are skewed to the downside. 

"However, we do not see RBI front-loading its ammunition, rather it may keep it ready for rain(ier) days. We will keep a lookout for any overhaul of the current liquidity framework in the near term and fiddle with non-conventional easing tools ahead apart from conventional easing, if the growth situation worsens or financial stability is disrupted," it said.

Devarsh Vakil, Head of Prime Research at HDFC Securities sees the RBI to cut the repo rate by 25 bps and shift its stance to accommodative from neutral. 

"The RBI is seen striking a dovish tone and we expect the bond yield curve to shift lower, with the 10-year yield expected to move towards 6.40% levels," he said. Vakil said easing inflation has provided the RBI with scope for a more accommodative policy approach, adding that concerns regarding global economic headwinds, especially following the US's announcement of reciprocal tariffs, also played a role in such expectations.