First View
Quantace Research MD Shubhada Patil on RBI Policy
This story was originally published at 11:28 IST on 5 August 2026
Register to read our real-time news.Informist, Wednesday, Aug. 5, 2026
MUMBAI - Shubhada Patil, smallcase manager, founder and MD, Quantace Research, said the following on the Reserve Bank of India's third bi-monthly monetary policy statement for financial year 2026-27 (Apr-Mar) detailed Wednesday:
"Markets should treat 5.25% as the base case, not a guarantee. The August MPC retained the repo rate at 5.25% with a neutral stance, projecting FY2026-27 CPI inflation at 5.0%, a Q3 peak of 5.9%, and core inflation at 4.3%. June CPI was 4.4%, but core inflation excluding precious metals remained 2.3–2.5%, supporting patience because pressures remain concentrated in food and fuel rather than broad demand.
The policy asymmetry is defensive. At the full-year inflation forecast, the real repo rate is 25 basis points; at the projected Q3 peak, it turns negative. That is acceptable only while inflation expectations stay anchored and rupee movements remain orderly. RBI's toolkit includes FX intervention, concessional swaps for public-sector external commercial borrowings, hedging-cost support for new FCNR (B) deposits, and foreign access to Indian securities, addressing currency stress before using the repo rate.
Our view is to price an extended 5.25% hold as the central case, but treat 5.50% as the defensive outcome if oil strength, sharper INR depreciation, or rising core and services inflation signals generalised imported cost pressures. A prolonged hold favours deposit-rich banks, capital goods and infrastructure, while a defensive hike would weigh on NBFCs, real estate, autos and EMI-sensitive consumption sectors." End
Compiled by Janaki Venugopalan
Filed by Himanshi Gupta
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