RBI Pauses at 5.25%, Analysts See 50 Bps 2026 Hike
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- RBI's MPC held the repo rate unchanged at 5.25% with a neutral stance, but analysts now expect a cumulative 50 basis point hike in 2026 — a complete reversal of the 125 bps of cuts delivered in 2025.
- Goldman Sachs forecasts a 50 bps RBI hike, sees Indian GDP growth slowing to 5.9% in 2026 (down from a pre-Iran war forecast of 7%) and inflation rising to 4.6% (from 3.9%).
- Indian rupee dropped to a record low after breaching the 95-mark against the US dollar for the first time, before recovering following RBI intervention measures.
- Real estate stocks like Godrej Properties and DLF have fallen up to 23% in 2026, while HDFC Bank dropped 22% and Bajaj Finance/Bajaj Finserv fell up to 17%, with Infomerics Ratings warning the sector's "conditional resilience" masks underlying fragility.
- NBFCs face the steepest exposure to rate hikes due to greater dependence on market borrowings and limited transmission flexibility, per Infomerics Ratings' Manoranjan Sharma.
- Axis Securities' Dnyanada Vaidya said banks are struggling to maintain NIMs with sticky cost of deposits, recommending investors favor larger private banks with strong CASA/deposit franchises.
Why it matters: India's 2025 rate-cut cycle has reversed — Goldman Sachs and analysts now forecast 50 bps of RBI hikes in 2026, after 125 bps of cuts last year. Godrej Properties, DLF, and HDFC Bank are already down 22-23% in 2026, and NBFCs face the steepest exposure. The rupee's breach of 95/dollar shows the pressure the RBI cannot offset with additional cuts.
