Calibrated Tightening Shocks Street
The RBI's surprise 25bps repo rate hike to 5.50% under Governor Sanjay Malhotra — the first increase since February 2023 — marks a decisive pivot from pause to 'calibrated tightening'. The Nifty 50 closed at 22,603.05, down 0.76% on policy day, while the Sensex shed 429 points as the market digested a hawkish shift it had not fully priced in. Despite an upgraded FY27 GDP forecast of 7.1%, the accompanying inflation projection of 5.2% and warnings that price pressures are 'no longer benign' dominated the narrative.
Rupee Under Pressure
The rupee tumbled 43 paise to close at 96.78/USD, a five-month low, after Malhotra signalled that further easing is off the table given the inflation outlook. Rising Brent crude, now at $101.67 a barrel and up 1.47%, alongside elevated US Treasury yields, is compounding pressure on the currency and India's import bill. A weaker rupee feeds directly back into the RBI's own inflation math, creating a feedback loop investors will watch closely into Q3.
Banks Shrug Off Hike, Auto Feels Heat
Rate-sensitive sectors diverged sharply post-policy: Nifty Bank actually climbed above 55,055, with PNB, Kotak Mahindra Bank, Union Bank and Canara Bank gaining up to 2% as investors read the hike as a sign of a central bank ahead of the curve. HSBC's upgrade of Kotak Mahindra Bank to 'buy', citing CEO clarity and stronger loan growth, added further support. Auto and real estate stocks, by contrast, declined on worries that higher borrowing costs will dent big-ticket financing demand.
TCS Kicks Off a Pivotal Earnings Season
TCS reports Q2FY27 results today, with shares already down 11% since the last print and 35% lower year-to-date, as IT services continue to face deferred client spending. The Nifty IT index is down 1.92% today, underscoring continued skepticism even as Motilal Oswal projects broader Nifty 50 earnings growth of 27% YoY — the strongest in 17 quarters — led by domestic cyclicals rather than exporters. The contrast between a buoyant earnings outlook and a battered IT pack will set the tone for how the market reads this results season.
Telecom Repricing Ahead of Jio IPO
Bharti Airtel raised postpaid tariffs for the first time in over two years, with shares rising more than 2% and Motilal Oswal retaining its buy rating, in a move widely read as pre-positioning ahead of the anticipated Jio Platforms IPO. Centrum's Piyush Pandey suggested the Jio listing, valued around ₹12 lakh crore, could trigger a sector-wide telecom rerating. For Reliance Industries shareholders, the key question shifts from IPO size to how the market ultimately values Jio's telecom, digital, cloud and AI businesses.
FPI Outflows Widen Amid Global Risk-Off
FPIs sold ₹21,745 crore of Indian equities in the second half of September alone, with financials, oil & gas and auto leading outflows, while emerging markets broadly saw $26.3 billion exit in the month on hawkish Fed signals. US 10-year and 30-year Treasury yields have hit 24-year highs, and Fed minutes point to another possible hike by year-end, a combination that continues to pull capital away from EM equities including India. The Dow Jones fell 0.66% and the Nasdaq 0.22% overnight, reinforcing a cautious global backdrop.
Adani Enterprises Credit Upgrade
CARE Ratings upgraded Adani Enterprises to 'AA' with a stable outlook, its highest-ever credit rating, citing improved financial flexibility from recent capital infusions and subsidiary stake sales. The stock is up over 22% year-to-date, with CoreWeave's deal to use 240MW of capacity at AdaniConneX's Navi Mumbai data centre adding a fresh AI-infrastructure dimension to the group's narrative. The upgrade stands out against a backdrop of broader FPI caution toward Indian financials and conglomerates.
Corporate Actions in Focus
Ola Electric's board approved a rights issue at ₹27 per share, a steep 26% discount to market price, aiming to raise up to ₹1,000 crore with chairman Bhavish Aggarwal committing to fully subscribe his portion. Separately, RBI formally removed Paytm Payments Bank from its list of scheduled banks following its 2023 licence cancellation, closing a long-pending regulatory chapter. Both developments highlight the continued capital discipline and regulatory cleanup underway across new-age and fintech-adjacent businesses.