December is shaping up to be a crucial month as traders position themselves ahead of the RBI’s upcoming policy decision, which could impact stocks’ trajectory through the new year.
The RBI’s Monetary Policy Committee (MPC), chaired by RBI Governor Sanjay Malhotra, will meet from December 3 to 5 and will announce its decision on the repo rate on December 5. The central bank has kept the repo rate steady at 5.5 percent since August, after cutting rates by a total of 100 basis points in the first half of the year.
Market experts broadly expect a 25 basis point cut in the repo rate, which would bring it down to 5.25 percent.
“With a comfortable inflation trajectory, accompanied by robust GDP growth rates expected for the second quarter of FY26, we believe the RBI has the scope to cut rates by 25 basis points even now in the upcoming policy meeting,” said Ajit Banerjee, President and Chief Investment Officer, Shriram Life Insurance Company.
The optimism stems from the latest quarterly GDP figures, which reaffirm India’s status as the world’s fastest-growing major economy. With inflation remaining within the central bank’s comfort zone and growth indicators improving, markets are increasingly pricing in the possibility that the RBI could signal a shift toward monetary easing sooner than previously expected.
Such a move would reduce financing costs, increase corporate profitability and boost sectors sensitive to interest rates, especially the real estate, automotive and financial sectors.
This macroeconomic backdrop has contributed to buoyant market conditions even as the benchmark indices – Sensex and Nifty 50 – briefly fell from record highs due to profit bookings and pressure on the rupee. However, broader sentiment remains constructive.
With macro fundamentals aligned and policy expectations rising, the stage seems set for a potentially stronger market end to the year.
Published on December 1, 2025
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