RBI Holds Rates, Infosys Shines, Auto Sales Surge

Key highlights

• RBI MPC: Maintained repo rate at 6.50%; retained 'withdrawal of accommodation' stance, raising FY27 inflation forecast slightly to 5.2%.
• Infosys Q2 FY27 Results: Reported ₹7,200 crore net profit (up 15% YoY) and ₹40,500 crore revenue (up 12% YoY CC), raising FY27 revenue guidance.
• Auto Sales (September): Major automakers reported strong September sales, with passenger vehicles up 18% YoY, driven by festive demand.
• Crude Oil: Brent crude futures hovered around $95.50/barrel, raising concerns about India's import bill and inflation outlook.
• Nifty 50: Traded around 23,550, showing resilience in IT and Auto sectors but facing pressure from rate-sensitive segments post-RBI.

RBI Maintains Status Quo, Signals Inflation Vigilance

The Reserve Bank of India's Monetary Policy Committee (MPC) today concluded its bi-monthly meeting, unanimously deciding to keep the benchmark repo rate unchanged at 6.50% for the eighth consecutive time. This decision was largely in line with market expectations, as the central bank continues to prioritize inflation control amidst robust economic growth. The MPC also maintained its 'withdrawal of accommodation' stance, indicating that the focus remains on bringing inflation within its target range.

Governor Shaktikanta Das, in his address, highlighted persistent concerns over food price volatility and elevated global crude oil prices, which led the MPC to slightly revise its inflation projection for FY27 upwards to 5.2% from the earlier 5.0%. Despite this, the GDP growth forecast for FY27 was retained at a strong 7.0%. The central bank emphasized the need for continued vigilance to ensure inflation aligns with the 4% target on a durable basis. While the decision provides stability, the hawkish tone on inflation suggests that any potential rate cuts might be further delayed, impacting borrowing costs for businesses and consumers. Banking and other rate-sensitive sectors saw initial cautious trading, with bond yields experiencing minor upward pressure as investors digested the implications of a prolonged high-interest rate environment.

What happened

The MPC, comprising six members, voted unanimously to keep the repo rate at 6.50%. The decision to maintain the 'withdrawal of accommodation' stance was also by a majority of 5-1.

Key numbers

• Repo Rate: Unchanged at 6.50%
• FY27 CPI Inflation Projection: Revised up to 5.2% (from 5.0%)
• FY27 GDP Growth Projection: Maintained at 7.0%

Why it matters

The RBI's decision underscores its commitment to price stability. While growth remains strong, the upward revision in inflation forecasts due to external factors like crude oil and domestic food prices indicates that the central bank is not yet ready to ease its monetary policy. This stance could mean higher borrowing costs for a longer period, potentially impacting corporate investment and consumer demand in the medium term.

Infosys Delivers Strong Q2 FY27 Results, Raises Guidance

IT services major Infosys today announced a robust performance for the second quarter of fiscal year 2027, surpassing market expectations and providing a significant boost to the technology sector. The company reported a consolidated net profit of ₹7,200 crore, marking a healthy 15% year-on-year increase. Revenue from operations also saw a strong uptick, reaching ₹40,500 crore, up 12% year-on-year in constant currency terms. The operating margin remained stable at 21.5% quarter-on-quarter, demonstrating efficient cost management.

A key highlight of Infosys's earnings report was the impressive large deal wins, totaling $3.5 billion for the quarter, reflecting continued client confidence and demand for digital transformation services. Following these strong results, Infosys revised its full-year FY27 revenue growth guidance upwards to 10-12% in constant currency, from the previous 9-11%. The operating margin guidance was maintained at 20-22%. The positive outlook from an industry bellwether like Infosys signals resilience in global tech spending and suggests a potentially stronger second half for the Indian IT sector. Infosys shares reacted positively to the news, surging 4-5% in early trade and leading gains across the Nifty IT index, with other major IT companies also witnessing buying interest.

What the filing says

The company's official exchange filing highlighted strong execution across key service lines and geographies, with particular strength in cloud, data, and AI-led transformation projects. The management expressed optimism about the demand environment, driven by clients' focus on efficiency and innovation.

Key numbers

• Q2 FY27 Net Profit: ₹7,200 crore (up 15% YoY)
• Q2 FY27 Revenue: ₹40,500 crore (up 12% YoY in constant currency)
• Operating Margin: 21.5%
• Large Deal Wins: $3.5 billion
• FY27 Revenue Guidance: Revised to 10-12% (from 9-11%) in constant currency

Why it matters

Infosys's strong performance and optimistic guidance provide a positive read-across for the entire Indian IT services sector. It indicates that despite global macroeconomic uncertainties, demand for digital services remains robust, and Indian IT firms are effectively capturing market share. This could lead to a re-rating of IT stocks and improved investor sentiment towards the sector.

More stocks and market news

Auto Sector: Robust September Sales Boost Sentiment

Major Indian automobile manufacturers today released their sales figures for September 2026, reporting robust growth across segments, primarily driven by strong festive season demand and new model launches. Passenger vehicle sales surged by 18% year-on-year, while two-wheelers saw a 15% increase, indicating a recovery in rural demand. Commercial vehicle sales also grew by 10% year-on-year, supported by ongoing infrastructure development. This positive sales data has buoyed investor sentiment in the auto sector, with shares of Maruti Suzuki, Tata Motors, and Bajaj Auto witnessing gains in today's trading session. The strong performance signals healthy consumer confidence and economic activity ahead of the peak festive period.

Crude Oil: Brent Hovers Near $95.50, Inflationary Concerns Persist

Global crude oil prices remained elevated today, with Brent crude futures trading around $95.50 per barrel. The sustained high prices are attributed to ongoing geopolitical tensions in the Middle East and concerns over potential supply cuts by OPEC+ nations. For India, a major oil importer, elevated crude prices pose significant risks to its current account deficit, domestic inflation, and the profitability of oil marketing companies (OMCs). Shares of Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) traded under pressure, while aviation stocks also faced headwinds due to rising fuel costs. The volatility in crude oil prices adds another layer of complexity to the RBI's inflation management efforts.

Market context

The Indian benchmark indices, Nifty 50 and Sensex, traded with mixed cues today. The Nifty 50 hovered around the 23,550 mark, while the Sensex was near 78,200. The Nifty IT index was a significant gainer, propelled by Infosys's strong results, while the Nifty Bank index saw some initial pressure post-RBI policy announcement before stabilizing. India VIX, the volatility index, remained relatively stable at 12.80, indicating moderate market expectations for near-term volatility. Global markets showed cautious optimism, with Asian peers largely positive, while US futures pointed to a flat open.

Why these stories matter

Today's market movements are largely dictated by a confluence of domestic monetary policy and corporate earnings. The RBI's decision to hold rates firm, coupled with a slightly hawkish inflation outlook, underscores the central bank's commitment to long-term price stability, which is crucial for sustainable economic growth. However, it also implies that the cost of capital may remain elevated for longer. On the corporate front, Infosys's strong performance provides a much-needed positive signal for the Indian IT sector, indicating resilience in global demand for digital services. The robust auto sales data further reinforces the narrative of strong domestic consumption and economic recovery, particularly ahead of the festive season. The persistent concerns around crude oil prices, however, remain a key macro overhang, potentially impacting inflation and corporate margins across various sectors.

What to watch next

• Global Central Bank Actions: Investors will closely monitor upcoming statements and decisions from major global central banks, particularly the US Federal Reserve, for cues on global liquidity and interest rate trajectories.
• Q2 FY27 Earnings Season: The ongoing earnings season will continue to be a major driver, with more large-cap companies expected to announce their results, providing further insights into corporate health and sector-specific trends.
• Inflation Data: Upcoming domestic and global inflation data points will be crucial in shaping expectations for future RBI monetary policy actions.
• Crude Oil Movement: Developments in geopolitical situations and OPEC+ decisions will be key in determining crude oil price movements and their impact on the Indian economy.

Sources

• Reserve Bank of India: Monetary Policy Statement, October 2026
• Moneycontrol: RBI MPC Meeting Live: Repo rate unchanged at 6.5%, inflation forecast raised
• NSE India: Infosys Ltd. Q2 FY27 Financial Results
• Business Standard: Infosys Q2 results beat estimates, raises FY27 revenue guidance
• Economic Times: Auto sales September 2026: Festive demand drives strong growth across segments

FAQ

1. What was the key outcome of the RBI MPC meeting today?

The RBI Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 6.50% for the eighth consecutive time. It also maintained its 'withdrawal of accommodation' stance and slightly raised the FY27 inflation projection to 5.2%.

2. How did Infosys perform in Q2 FY27?

Infosys reported a consolidated net profit of ₹7,200 crore, up 15% year-on-year, and revenue of ₹40,500 crore, up 12% year-on-year in constant currency. The company also raised its full-year FY27 revenue growth guidance to 10-12%.

3. Why are auto stocks gaining today?

Auto stocks are gaining today following the release of robust September 2026 sales figures by major manufacturers. Passenger vehicle sales were up 18% year-on-year, driven by strong festive season demand and new model launches.

4. What is the current status of crude oil prices and its impact on India?

Brent crude futures are currently trading around $95.50 per barrel. Elevated crude prices pose a risk to India's import bill, domestic inflation, and the profitability of oil marketing companies and aviation firms.

5. What does the RBI's 'withdrawal of accommodation' stance mean?

The 'withdrawal of accommodation' stance indicates that the central bank's primary focus remains on reducing excess liquidity in the system and ensuring that inflation aligns with its target, suggesting that monetary policy will remain tight for the foreseeable future.

Disclaimer: This article is for educational purposes only. It does not constitute investment advice. Please consult a SEBI-registered financial advisor before making investment decisions.