RBI Signals Prolonged Vigilance on Inflation; Wipro's Cautious Outlook Weighs on IT

The Indian equity markets are navigating a cautious afternoon session as investors digest key developments. Reserve Bank of India Governor Shaktikanta Das reiterated the central bank's commitment to inflation targeting, hinting at a potentially prolonged hawkish stance due to persistent price risks. Meanwhile, IT major Wipro reported better-than-expected Q2 FY27 earnings but issued a conservative revenue guidance for the next quarter, impacting sector sentiment. The Nifty 50 and Sensex traded with minor gains, reflecting a mixed market reaction to these crucial updates in the 12:00 PM to 2:00 PM IST window.

Key highlights

• RBI Governor: Signaled continued vigilance on inflation, citing global commodity prices and domestic food inflation as key risks.
• Wipro Q2 FY27 Results: Reported a net profit of ₹3,520 crore, up 8% YoY, surpassing analyst estimates.
• Wipro Guidance: Issued a conservative Q3 FY27 revenue growth forecast of 0.5-2.5% QoQ in constant currency, leading to stock volatility.
• PLI Scheme 2.0: Government released detailed guidelines for advanced electronics manufacturing, targeting ₹50,000 crore investment.
• Crude Oil: Brent crude futures surged past $95.50 per barrel on geopolitical tensions, raising inflation concerns for India.

RBI Governor Hints at Extended Hawkish Stance Amid Inflation Risks

Reserve Bank of India (RBI) Governor Shaktikanta Das, in a mid-day address on Friday, underscored the central bank's unwavering focus on achieving its inflation target, signaling that the fight against price pressures might require a sustained vigilant approach. Speaking at a financial conclave, Governor Das highlighted "persistent upside risks" stemming from elevated global commodity prices, particularly crude oil, and continued volatility in domestic food inflation.

The Governor's remarks suggested that while domestic economic activity remains resilient, the RBI is not yet ready to ease its monetary policy stance. He emphasized that future policy actions would remain strictly data-dependent, implying that any pivot towards rate cuts might be further delayed if inflationary pressures do not abate sustainably. This cautious tone from the central bank chief has led to a marginal uptick in government bond yields, with the 10-year benchmark yield briefly touching 7.38% from its morning levels, as market participants began pricing in the possibility of interest rates remaining higher for longer.

Banking stocks, particularly public sector banks, saw some profit-booking after the statement, as prolonged higher interest rates could impact credit demand in certain segments. Analysts noted that the RBI's stance reflects a global trend among central banks prioritizing inflation control over growth, especially given the recent resurgence in energy prices. The central bank's commitment to price stability is seen as crucial for maintaining macroeconomic stability, even if it means a tighter liquidity environment in the near term. Investors will now closely watch upcoming inflation data and global commodity price movements for further cues on the RBI's future policy trajectory.

Wipro's Q2 Profit Beats Estimates, But Cautious Guidance Dampens Enthusiasm

IT services major Wipro Ltd. announced its second-quarter results for the financial year 2026-27, reporting a consolidated net profit of ₹3,520 crore, marking an 8% year-on-year increase. This performance surpassed analyst expectations, driven by steady deal wins and operational efficiencies. The Bengaluru-headquartered company's revenue for the quarter stood at ₹25,800 crore, up 12% from the same period last year, indicating robust growth in its core services.

Despite the strong profit numbers, investor sentiment turned cautious following Wipro's revenue guidance for the third quarter of FY27. The company projected a constant currency revenue growth of between 0.5% and 2.5% quarter-on-quarter, which was perceived as conservative by market participants. Management attributed the subdued outlook to ongoing global macroeconomic headwinds, including inflationary pressures in key markets like North America and Europe, leading to increased client cautiousness and delayed decision-making on discretionary IT spending.

Wipro's shares, which initially saw a brief uptick post-earnings announcement, pared gains and traded marginally lower by 1.5% on the NSE by 01:45 PM IST. The cautious guidance from Wipro mirrors similar sentiments expressed by some of its peers earlier in the earnings season, highlighting the challenging demand environment for the Indian IT sector. Analysts suggest that while deal pipelines remain healthy, the conversion to revenue is taking longer, impacting short-term growth projections. The company emphasized its focus on large deal wins and cost optimization to navigate the current environment.

More stocks and market news

Government Unveils PLI 2.0 for Advanced Electronics Manufacturing

The Ministry of Electronics and Information Technology (MeitY) today released the detailed guidelines for the Production Linked Incentive (PLI) Scheme 2.0 aimed at boosting Advanced Electronics Manufacturing in India. The revised scheme targets attracting investments worth ₹50,000 crore over the next five years, with a strong focus on critical components such as semiconductors, display panels, advanced sensors, and passive components. This initiative is expected to reduce India's reliance on imports for high-value electronic components and foster a robust domestic manufacturing ecosystem. Companies engaged in electronics manufacturing services (EMS) and component production, such as Dixon Technologies and Amber Enterprises, witnessed renewed buying interest, with their shares gaining 2-4% in afternoon trade. The scheme offers incentives linked to incremental sales, encouraging large-scale production and technological depth.

Crude Oil Surges Past $95, Rekindling Inflation Worries

Brent crude futures extended their rally today, climbing over 2% to trade at $95.50 per barrel, driven by escalating geopolitical tensions in the Middle East and concerns over potential supply disruptions. The sharp rise in international oil prices has reignited inflation concerns for India, a major oil importer. Higher crude prices are expected to widen the country's current account deficit and put upward pressure on domestic fuel prices, potentially impacting consumer spending and corporate margins. Shares of oil marketing companies (OMCs) like Indian Oil Corporation and Bharat Petroleum Corporation traded with a negative bias, as higher crude costs could squeeze their marketing margins if retail price hikes are not fully passed on. The development adds another layer of complexity to the RBI's inflation management efforts.

Market context

As of 01:50 PM IST, the Nifty 50 was trading at 20,185.30, up 0.15%, while the BSE Sensex gained 0.18% to 67,520.10. The Nifty Bank index was largely flat, reflecting mixed sentiment in the banking sector. The India VIX, a measure of market volatility, edged up by 0.8% to 12.85. Global markets showed a mixed trend, with Asian peers trading cautiously. Brent crude oil was at $95.50/barrel, and the Indian Rupee traded around 83.20 against the US Dollar.

Why these stories matter

The RBI Governor's statement reinforces the central bank's commitment to price stability, which is crucial for long-term economic health but suggests a tighter monetary environment for longer. Wipro's results and cautious guidance highlight the ongoing challenges in the global IT services demand, impacting a key sector that is a significant contributor to India's GDP and exports. The new PLI scheme for advanced electronics underscores the government's push for self-reliance and manufacturing, potentially creating new investment opportunities. The surge in crude oil prices remains a critical macro headwind, directly influencing inflation, trade balance, and corporate profitability across various sectors.

What to watch next

• RBI Monetary Policy: Investors will keenly await the next Monetary Policy Committee (MPC) meeting for further clarity on interest rate trajectory.
• IT Sector Deal Wins: Monitoring large deal announcements and commentary from IT companies on demand outlook in upcoming investor calls.
• PLI Scheme Applications: Watch for major companies announcing investment plans under the new Advanced Electronics PLI scheme.
• Global Crude Oil Prices: Continued monitoring of geopolitical developments and their impact on international oil benchmarks.

Sources

• Reuters: RBI Governor signals prolonged inflation fight amid global risks
• Moneycontrol: Wipro Q2 FY27 results: Net profit up 8% YoY, guidance cautious
• Press Information Bureau (PIB): MeitY releases PLI 2.0 guidelines for Advanced Electronics
• Bloomberg: Brent crude surges past $95 on Middle East tensions

FAQ

1. What did the RBI Governor say about inflation today?

RBI Governor Shaktikanta Das reiterated the central bank's commitment to inflation targeting, citing persistent upside risks from global commodity prices and domestic food inflation. He hinted at continued vigilance and a data-dependent policy, suggesting a potentially prolonged hawkish stance.

2. How did Wipro perform in Q2 FY27?

Wipro reported a consolidated net profit of ₹3,520 crore for Q2 FY27, an 8% increase year-on-year, surpassing analyst estimates. Revenue grew 12% year-on-year to ₹25,800 crore.

3. Why did Wipro's stock fall despite good Q2 results?

Wipro's stock pared gains and traded lower due to its conservative revenue growth guidance for Q3 FY27, projecting 0.5% to 2.5% quarter-on-quarter growth in constant currency. This cautious outlook reflects global macroeconomic headwinds and client cautiousness.

4. What is the new PLI scheme for advanced electronics?

The Ministry of Electronics and Information Technology (MeitY) released detailed guidelines for PLI Scheme 2.0 for Advanced Electronics Manufacturing. It aims to attract ₹50,000 crore in investments over five years, focusing on components like semiconductors, displays, and advanced sensors.

5. Why are crude oil prices rising today?

Brent crude futures surged past $95.50 per barrel due to escalating geopolitical tensions in the Middle East and concerns over potential supply disruptions, leading to worries about India's import bill and inflation.

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.