RBI Cuts Repo, CRR; Markets Rally on Dovish Pivot

The Reserve Bank of India (RBI) unexpectedly cut its repo rate by 50 basis points to 5.5% and reduced the Cash Reserve Ratio (CRR) by 100 basis points in a move to boost liquidity and support economic growth, marking its third rate cut since February. The decision was driven by subdued inflation and concerns about external risks, including U.S. tariffs. Indian equity markets responded positively, with broad-based gains led by rate-sensitive sectors such as realty, financials, and autos, and mid- and small-cap stocks outperforming the broader market. Analysts cited the RBI's dovish stance and the potential for increased market liquidity by November, recommending a 'buy on dips' approach. The RBI's neutral policy stance and ongoing trade negotiations with the U.S. remain crucial for future market direction. Inflation remains under control, allowing the RBI to prioritize growth.