Archive · 5 Aug 2026
RBI holds rates steady, raises FY27 GDP forecast; stocks rally
The Reserve Bank of India is the big bank that manages money in India.
It decides how expensive it is for other banks to borrow money.
This cost is called the repo rate.
On Wednesday, the RBI decided to keep the repo rate the same at 5.25%.
It also said it thinks India's economy will grow a little faster than before.
At the same time, it expects prices of things to go up more slowly.
When people heard this news, they felt happy about some company shares.
Shares of car companies and builders went up a lot.
Shares of government-owned banks mostly went up, but shares of private banks went down a little.
The two big stock market measures moved in different directions that day.
The RBI MPC unanimously kept the repo rate unchanged at 5.25% and retained its neutral stance.
The RBI raised its FY27 GDP growth forecast to 6.7% from 6.6% and lowered its FY27 CPI inflation projection to 5% from 5.1%.
Nifty Auto hit a record intraday high of 29,489.2, while Nifty Realty surged over 2.5% amid buying in rate-sensitive stocks.
The Sensex jumped over 600 points (nearly 1%), while the Nifty 50 slipped 0.20%, keeping benchmarks divergent for a third straight session.
Banking stocks were mixed: the Nifty PSU Bank index rose 1.4%, while the Nifty Private Bank index fell 0.31%.
RBI Governor Sanjay Malhotra said underlying inflation has remained under control and economic growth is supported by resilient domestic demand and robust exports.
- Who
- The Reserve Bank of India's Monetary Policy Committee (MPC), led by RBI Governor Sanjay Malhotra, along with stock market investors and analysts.
- What
- The MPC kept the repo rate unchanged at 5.25%, raised the FY27 GDP growth forecast to 6.7%, and lowered the FY27 CPI inflation projection to 5%, triggering a rally in rate-sensitive stocks.
- When
- Wednesday, 5 August 2026.
- Where
- India, with stock trading on the National Stock Exchange (NSE).
- Why
- To support economic growth and maintain stability amid global headwinds, reflecting resilient domestic demand and controlled inflation; markets reacted to policy continuity and improved forecasts.
Supportive View
Cautious View
Impact on housing demand
Supportive View
Shishir Baijal of Knight Frank India said a stable interest rate environment will strengthen buyer confidence, provide greater certainty for businesses and investors, ensure continued access to affordable financing, and sustain housing demand and investment.
Cautious View
Anuj Puri of ANAROCK Group said the unchanged policy rate provides stability at a time of macroeconomic uncertainty, but it may not be sufficient to revive demand in the mass housing segment.
Market reaction to the policy
Supportive View
V K Vijayakumar of Geojit Investments said the policy, backed by the economy's resilience and benign core inflation, is positive for stock markets and bond yields are stable.
Cautious View
Benchmarks stayed divergent for a third session, with the Nifty 50 declining 0.20% and private bank stocks under pressure, signaling a mixed rather than uniform market response.
- Repo rate
- 5.25% (unchanged)
- MPC stance
- Neutral (retained)
- FY27 GDP growth forecast
- 6.7%, raised from 6.6%
- FY27 CPI inflation forecast
- 5%, lowered from 5.1%
- Nifty Auto
- Record intraday high of 29,489.2 (up 1.5%)
- Nifty Realty
- Intraday high of 915.10 (up 2.6%)
- Sensex movement
- Up over 600 points (nearly 1%)
- Nifty 50 movement
- Down 0.20%