India's domestic passenger vehicle sales experienced a robust 24.6 per cent year-on-year increase in June, propelled by favourable government policies like income tax relief and repo rate cuts, alongside resilient rural demand, even as global crude oil prices pose potential cost pressures.
"Our endeavour is to bring headline inflation in line with the target over the medium term," said RBI Governor Sanjay Malhotra, addressing concerns about the central bank's policy stance and economic outlook.
S&P Global Ratings projects India's economic growth to slow to 6.6 per cent in FY27, down from 7.7 per cent in FY26, citing energy stress and a potential sub-par monsoon.
Passenger vehicle sales in India are estimated to have surged by nearly 25 per cent in June 2024, reaching approximately 4 lakh units, with Maruti Suzuki, Tata Motors PV, and Mahindra & Mahindra leading the growth, despite concerns over geopolitical tensions and monsoon impact.
'Banking is the only sector that can see double-digit growth in FY27.'
Most members of the Reserve Bank of India's Monetary Policy Committee (MPC) expressed concerns about inflation becoming generalised and highlighted uncertainties surrounding both inflation and growth prospects due to the West Asia conflict, according to the recently released minutes.
'The MPC is likely to prioritise the key mandate, which is inflation, while relying on other instruments to stabilise the currency and bond markets.'
The Reserve Bank of India (RBI) has extended the trading hours for the interbank call money market from July 1, and that of repo and tri-party repo markets from August 1. Market participants said the decision is intended to help reduce the large Standing Deposit Facility (SDF) balances held by banks with the RBI, thereby addressing liquidity mismatches.
The Indian rupee is highly vulnerable among Asian currencies, with Barclays and MUFG warning of a potential depreciation towards 100/$ if the West Asia conflict persists, driven by widening current account deficits and elevated crude oil prices.
Despite the Reserve Bank of India's (RBI) and the government's recent initiatives to attract foreign capital, which are expected to alleviate pressure on long-duration bonds, most debt fund managers are maintaining a cautious stance, favouring shorter-duration papers due to global uncertainties and potential future rate hikes.
'The US reciprocal tariff has added another element of uncertainty and the central bank may prefer to wait and get further clarity.'
India's banking system is grappling with a persistent liquidity surplus exceeding Rs 5 trillion, driven by significant government spending and bond redemptions, leading market participants to anticipate the Reserve Bank of India will step up Variable Rate Reserve Repo operations to manage the excess funds.
The RBI seems to be acknowledging that all deposits are not equal -- a deposit with a lower run-off assumption is inherently more valuable than one that could disappear overnight, points out Tamal Bandyopadhyay.
The Indian banking system's net liquidity surplus has reached a four-year high of Rs 4.57 trillion, driven by maturing government securities, with further maturities expected to push the surplus to around 5 trillion.
Credit card transactions in India have surged over 2.6 times between 2021 and 2025, reaching 570 crore volumes and Rs 23.2 lakh crore in value, with private sector banks significantly increasing their market share, according to a recent RBI report.
Credit card transactions in India have surged over 2.6 times between 2021 and 2025, driven by private sector banks, while debit card usage declines due to growing adoption of UPI and digital wallets, according to an RBI report.
Fuel prices have risen by about Rs 7.5 per litre since May 15, as global crude oil prices surged due to the ongoing conflict in West Asia and supply concerns around the Strait of Hormuz.
India's total automobile retail sales recorded a significant 9.55 per cent year-on-year growth in May, reaching an all-time high of 25,31,067 units, driven by strong performances in three-wheelers, passenger vehicles, and tractors, despite prevailing heatwave conditions and fuel price pressures.
Indian carmakers experienced a robust start to the new fiscal year, with an estimated 4.5 lakh passenger vehicles sold in April, marking a 27 per cent increase year-on-year, attributed to factors like GST 2.0, repo rate cuts, and income tax benefits.
The net liquidity surplus in the banking system fell to Rs 16,875 crore on Thursday the latest data by the Reserve Bank of India (RBI) showed, lowest since 22 January.
'If the war continue for a longer period of time, it is just a matter of time before the government will pass on some of the price increases.'
'As the Budget has taken some measures to spur growth, similar action from the MPC may be expected.'
Yield-generating instruments like Infrastructure Investment Trusts (Invits), Real Estate Investment Trusts (Reits), and Non-Convertible Debentures (NCDs) are witnessing a surge in investor interest, contrasting with a notable slowdown in the equity primary market, which saw only one IPO in April.
India's retail inflation marginally increased to 3.4 per cent in March, up from 3.21 per cent in February, primarily due to an uptick in certain food items and the initial impact of the West Asia crisis on fuel prices, according to government data.
The weakening of inflation, prospects of economic growth, geopolitical uncertainty and comfortable system liquidity may result in the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) to cut the repo rate by another 25 basis points, opine top economists. They also said the external economic pressures like trade policies and others would require continued RBI's accommodative stance and policy support for the Indian industry to sustain the growth.
The Reserve Bank of India (RBI) Governor Sanjay Malhotra is now confronting the classic growth-inflation tradeoff, a situation exacerbated by the West Asia war, which threatens to end the 'goldilocks period' of low inflation and robust growth.
After a 25 basis point rate cut in December, the RBI on Friday decided to pause on the policy rate front amid geopolitical uncertainties.
Reserve Bank Governor Sanjay Malhotra on Friday said the key policy rates will remain at low levels for a long period and may go down even further.
Since February 2025, the RBI has reduced the policy rate by 100 basis points. In its previous policy review in June, it had trimmed the repo rate by 50 basis points to 5.5 per cent.
Uncertainties stemming from the West Asia crisis and its potential impact on inflation and economic growth were key factors in the Reserve Bank of India's Monetary Policy Committee (MPC) decision to maintain the status quo on interest rates, according to the recently released MPC meeting minutes.
Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that preventing second-round effects of supply shocks, where inflation expectations rise due to prolonged disruptions, is the primary role of monetary policy. He also defended the RBI's foreign exchange market interventions, asserting it did not commit to an 'indefensible peg'.
The RBI's monetary policy committee is expected cut benchmark interest rate by 25 basis points in its policy review meeting next month to push growth, India Ratings and Research (Ind-Ra) said on Thursday. "We expect the headline inflation in FY25 to cool off to 4.7 per cent. Monetary easing may be limited to 75 bps in FY26," Ind-Ra Chief Economist and Head Public Finance, Devendra Kumar Pant said.
Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that recent regulatory measures to address foreign exchange market volatility, such as capping banks' net open positions, are temporary and aligned with current market conditions, not signalling any structural shift in policy.
The rupee declined 31 paise to settle at 90.65 against the US dollar on Friday, weighed down by geopolitical uncertainties over the US-Iran talks, and a sharp rise in global crude oil prices.
Investors with a 6 to 12 month horizon may consider them. They should align their holding period with the fund's maturity profile and prefer schemes with a lower expense ratio.
Dr Nagesh Kumar, one of the three new MPC members, wanted the MPC to reduce the repo rate by 25 basis points to 6.25%.
Benchmark lending rates unchanged with repo rate at 5.25%
"It is quite possible that the rates will remain low in the near to medium term, but that will depend on how conditions evolve," said RBI Governor Sanjay Malhotra.
Passenger vehicle sales in India reached a record high of 4.7 million units in FY26, boosted by strong performances from major automakers and the implementation of GST 2.0.
Hiring demand strongest in ecommerce, tech startups, healthcare, and energy sectors, with Bengaluru, Hyderabad, and Pune leading.
