RBI Set to Hold Rates on Soft Growth Data

RoboMacro Research

RBI Set to Hold Rates on Soft Growth Data

Nifty 5024,774.30+1.60%

Sensex78,639.03+0.70%

USD/INR95.33-0.07%

EUR/INR109.63-0.32%

Market Snapshot

Asset	Level	Change
Nifty 50	24,774.30	+1.60%
Sensex	78,639.03	+0.70%
USD/INR	95.33	-0.07%
EUR/INR	109.63	-0.32%
Reliance	1,290.90	-2.13%
HDFC Bank	742.00	-1.46%
Brent Crude	78.96	-5.74%
Gold	4,131.10	+2.41%
Bitcoin	64,037.70	+0.91%
India Short-term Rate	5.50%	+0.00%
India Long-term Rate	-	-

Prior Economic Events

Data	Prior	Cons	Actual
No events available

Today's Economic Events

Data	Prior	Cons	Time

Wednesday (2026-08-05)
RBI Interest Rate Decision	5.25	5.25	20:30

RBI expected to keep repo rate at 5.25% on soft July factory data
Nifty climbs 1.6% to 24,774.30 while Brent crude drops 5.74%
June CPI at 4.38% keeps inflation within target band

Yesterday's Recap

Indian equities advanced ahead of the RBI decision, with Nifty 50 rising 1.60% to 24,774.30 and Sensex gaining 0.70% to 78,639.03. USD/INR eased 0.07% to 95.33 as foreign inflows supported the currency. Brent crude fell sharply by 5.74% to 78.96, while gold climbed 2.41% to 4,131.10 on safe-haven demand.

Reliance and HDFC Bank shares declined 2.13% and 1.46% respectively amid sector rotation. No major data releases occurred on August 3, leaving markets focused on policy signals. Short-term rates held steady at 5.50%.

Investors positioned for a status-quo outcome given contained price pressures. July manufacturing PMI slowed to a near five-year low, underscoring weakening domestic demand and reinforcing the case for a prolonged pause. Marico posted a 25% rise in Q1 profit on robust India volumes and international expansion.

FDI inflows remained healthy in June, led by services and software sectors, supporting the external account. Monsoon rainfall running above long-period average aided kharif sowing and lowered food-price risks. Infrastructure capex by the central government continued to expand at a double-digit pace.

The Day Ahead

The RBI Monetary Policy Committee will announce its August decision at 20:30 IST, with consensus pointing to an unchanged 5.25% repo rate. Markets will parse Governor Sanjay Malhotra’s commentary for any shift in the inflation-growth balance. Fortnightly foreign-exchange reserves data due later may show continued accumulation near recent highs.

No other major domestic releases are scheduled, keeping attention on the policy statement and quarterly projections. Equity and bond volatility is likely to rise once the decision and forward guidance are released. Recent communications from Governor Malhotra have stressed data dependence and a commitment to keeping inflation near 4% without jeopardizing growth.

With June CPI at 4.38%, the committee is expected to vote to hold the repo rate at 5.25%. Liquidity management remains balanced, with no immediate need for large-scale operations. Forward guidance is likely to retain the neutral stance while highlighting risks from food prices and global oil moves.

The $41 billion in recent FX inflows have eased external-sector concerns and given the MPC room to stay on hold.

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Other Economic Notes

July manufacturing PMI slowed to a near five-year low, underscoring weakening domestic demand and reinforcing the case for a prolonged pause. Marico posted a 25% rise in Q1 profit on robust India volumes and international expansion. FDI inflows remained healthy in June, led by services and software sectors, supporting the external account.

Monsoon rainfall running above long-period average aided kharif sowing and lowered food-price risks. Infrastructure capex by the central government continued to expand at a double-digit pace. Softer global growth signals and elevated oil-price volatility weighed on emerging-market sentiment, with Brent’s sharp drop providing relief for India’s import bill.

Gold’s rally reflected ongoing geopolitical uncertainty and lower US yields, boosting India’s reserves valuation. Asian central banks maintained cautious stances amid mixed inflation prints, limiting aggressive easing elsewhere.

Global Macro News

Softer global growth signals and elevated oil-price volatility weighed on emerging-market sentiment, with Brent’s sharp drop providing relief for India’s import bill. Gold’s rally reflected ongoing geopolitical uncertainty and lower US yields, boosting India’s reserves valuation. Asian central banks maintained cautious stances amid mixed inflation prints, limiting aggressive easing elsewhere.

Stronger US dollar flows into India helped offset portfolio outflows from regional peers. Global risk appetite improved modestly on expectations of steady monetary policy in major economies. India’s rupee showed relative resilience compared with other Asian currencies during the session.

July manufacturing PMI slowed to a near five-year low, underscoring weakening domestic demand and reinforcing the case for a prolonged pause. Marico posted a 25% rise in Q1 profit on robust India volumes and international expansion.

RBI Watch

Recent communications from Governor Malhotra have stressed data dependence and a commitment to keeping inflation near 4% without jeopardizing growth. With June CPI at 4.38%, the committee is expected to vote to hold the repo rate at 5.25%. Liquidity management remains balanced, with no immediate need for large-scale operations.

Forward guidance is likely to retain the neutral stance while highlighting risks from food prices and global oil moves. The $41 billion in recent FX inflows have eased external-sector concerns and given the MPC room to stay on hold. Markets price only modest chances of a cut before year-end, aligning with the RBI’s focus on durable price stability.

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Continuation

RBI Watch (continued)

July manufacturing PMI slowed to a near five-year low, underscoring weakening domestic demand and reinforcing the case for a prolonged pause. Marico posted a 25% rise in Q1 profit on robust India volumes and international expansion. FDI inflows remained healthy in June, led by services and software sectors, supporting the external account.

India Macro Daily(Beta Mode)