Tag: geopolitical tensions

RBI should opt for 25bps repo rate cut, says SBI

**RBI Should Opt for 25bps Repo Rate Cut, Says SBI**

*By Dwaipayan Roy | Sep 28, 2025, 04:49 PM*

A recent report by the State Bank of India (SBI) has recommended a 25 basis points (bps) cut in the repo rate ahead of the upcoming Reserve Bank of India (RBI) monetary policy meeting. This suggestion comes amid expectations of benign inflation in the near term.

However, despite SBI’s recommendation, most economists anticipate that the Monetary Policy Committee (MPC) will maintain the status quo when it announces its decision on October 1.

### Rate Reduction: The ‘Best Possible Option’

The SBI report describes a 25bps rate cut as the “best possible option” for the RBI at this stage. Earlier this year, the central bank had already slashed the key short-term lending rate (repo) by 100bps in three installments since February, responding to a decline in consumer price index (CPI)-based inflation.

Nevertheless, some experts believe the MPC may opt to hold the current rates steady during the upcoming policy review, weighing various economic factors.

### Upcoming MPC Meeting

The MPC, headed by RBI Governor Sanjay Malhotra, will convene from October 1 to 3 to discuss the policy rate. This meeting takes place against a backdrop of ongoing geopolitical tensions and recent US-imposed 50% tariffs on Indian shipments.

In its August bi-monthly monetary policy review, the central bank chose to keep rates unchanged, carefully assessing how these external factors might impact India’s economy.

### Expectations and Economic Outlook

Aditi Nayar, Chief Economist at ICRA, noted that GST rationalization could reduce headline CPI inflation by 25-50 basis points during Q3 FY2026 and Q2 FY2027. She also expects that October-November 2025 could mark a new low for CPI inflation, although an upward trend may resume afterward.

Meanwhile, Dharmakirti Joshi of Crisil Limited expects a repo rate cut as early as October, citing lower-than-expected inflation numbers and sustained strong demand.

As the MPC meeting approaches, all eyes will be on the RBI’s decision and its implications for India’s monetary policy trajectory.
https://www.newsbytesapp.com/news/business/sbi-recommends-25bps-repo-rate-cut-for-upcoming-rbi-mpc/story

FPIs pull ₹7,945cr from Indian equities, net outflows ₹1.4L crore

**FPIs Withdraw ₹7,945 Crore from Indian Equities; Net Outflows Cross ₹1.4 Lakh Crore in 2025**

*By Akash Pandey | Sep 21, 2025, 02:18 PM*

Foreign Portfolio Investors (FPIs) have pulled out ₹7,945 crore from Indian equities so far in September. This continued sell-off is largely driven by global uncertainties, including tariffs and ongoing geopolitical tensions.

The trend follows significant outflows seen in previous months, with FPIs withdrawing ₹34,990 crore in August and ₹17,700 crore in July. Overall, FPI sell-offs in Indian equities have reached a staggering ₹1.38 lakh crore in 2025, according to the latest data.

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### Looking Ahead: Signs of Moderation in Selling

Market experts are closely monitoring upcoming macroeconomic data from both India and the United States, along with tariff negotiations. These factors are poised to influence FPI flows in the near term.

Despite remaining net sellers in September with cumulative equity outflows of ₹7,945 crore through September 19, FPIs have displayed some moderation in their selling behavior recently.

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### Impact of the Fed’s Rate Cut on Market Liquidity

Following the US Federal Reserve’s decision to cut interest rates by 25 basis points, FPIs briefly turned net buyers last week, purchasing equities worth ₹900 crore during this period.

“For the current week, FPIs bought Indian equities worth ₹900 crore on the back of the Fed’s rate cut,” said Vaqarjaved Khan, Senior Fundamental Analyst at Religare Broking Ltd. He added that two more rate cuts are projected in 2025, which could significantly enhance liquidity in global markets.

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### Investor Sentiment Bolstered by Easing Trade Tensions

Himanshu Srivastava from Morningstar Investment Research India observed a “modest but noticeable return” of foreign investors to Indian equities last week. He attributed this shift to the Fed’s dovish stance, easing US-India trade frictions, and a stable macroeconomic outlook in India.

However, Srivastava cautioned that persistent global uncertainties and geopolitical risks continue to temper investor enthusiasm, keeping FPI flows cautious.

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### Market Strategy: FPIs Diversify into Debt Markets

V K Vijayakumar from Geojit Financial Services pointed out that the FPI selling trend in India has coincided with buying activity in other Asian markets such as Hong Kong, Taiwan, and South Korea. This strategy has been profitable this year but may evolve going forward.

Additionally, debt markets in India have seen FPI investment, with inflows of approximately ₹900 crore under the general limit and ₹1,100 crore through the voluntary retention route.

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**In summary, while FPIs continue to withdraw from Indian equities amid global uncertainties, recent developments such as the Fed’s rate cuts and easing trade tensions offer potential for stabilization and renewed foreign investment flows in the near future.**
https://www.newsbytesapp.com/news/business/fpis-pull-out-8-000cr-from-equities-in-september/story

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