• Repo rate: Held steady at 5.50% (unanimous MPC decision)
• Policy stance: Maintained as “Neutral”, indicating neither tightening nor easing immediately
• GDP forecast: Kept at 6.5% for FY26, with stable inflation projection (CPI ~3.1%, core inflation ~4%)
• CRR cut (June announcement) to begin in Sept 2025, easing liquidity conditions
• Liquidity framework update: RBI working group recommends WACR remain policy anchor, with repo/reverse repo tools to manage ₹4T daily liquidity surplus
Impact on Sectors
• Banking, NBFCs, Real Estate: Shares slipped up to 4% following neutral RBI stance → markets had hoped for further rate cuts
• Consumer & Housing: Stable rates support predictable EMIs, lending sentiment, and sustained demand
• Corporate Borrowers: Financing costs unchanged; borrowers continue to benefit from rate cuts earlier in the year
SEBI / Capital Markets Regulation (India)
Key Updates
• IPO reforms: Proposal to reduce retail allocation in large IPOs (>₹5,000 cr) from 35% to 25%, and increase institutional allotment to 60%; enhancement of anchor investor quota including pension funds and insurance players ~30–40% reservation
• Related Party Transactions (RPT): Threshold for mandatory shareholder approval proposed to rise to ₹50 bn; transactions below ₹150 mn may not require disclosure → aims to ease compliance burdens for large firms
• Derivatives market reform: Following manipulation by Jane Street, SEBI calls for structural reforms, tighter oversight, and protection for retail futures/options traders (90% reportedly lose money)
Sector Impacts
• Media, Real Estate & Large IPO-prone sectors: Increased institutional participation may shift pricing and access dynamics in upcoming IPO issuances
• Large Corporates: Less frequent shareholder approvals for low-value RPTs; improved governance alignment with scale
• Financial services / Retail trading platforms: Rules likely tighten controls, risk education, and transparency for derivatives users
U.S. Federal Reserve (Fed) & Tariffs
Latest Developments
• U.S. tariffs escalate: Trump administration implements additional 25% secondary tariff on Indian goods, totaling ~50% on Russian-related exports, effective August 27, 2025, tackling industries from textiles to auto components
• Fed stance inferred: Rising trade tensions and persistent U.S. inflation are likely keeping U.S. rates high, sustaining upwards pressure on global yields.
Sector Impact in India
• Exporters (Textiles, Auto Parts, Pharma, Engineering): Significant export risk; competitiveness may erode with steeper duties
• Currency & Commodities: Rupee under pressure (~₹87.7/USD), impacting cost of imports, dollar-denominated liabilities, and corporate margins
• Industrial & Logistics: Higher global input costs and potential demand slowdown may affect margins across manufacturers and ports
