Bank stocks trade mixed after RBI keeps repo rate unchanged at 5.25%

Banking stocks traded mixed on Wednesday after the Reserve Bank of India (RBI) kept the policy repo rate unchanged at 5.25% at the conclusion of its three-day Monetary Policy Committee (MPC) meeting held from 3 to 5 August 2026.

The six-member MPC unanimously voted to keep the repo rate unchanged. Accordingly, the Standing Deposit Facility (SDF) rate remains at 5.00%, while the Marginal Standing Facility (MSF) rate and the Bank Rate continue at 5.50%. The committee also retained its neutral policy stance.

Following the announcement, the Nifty Bank index slipped 0.28% to 57,747.45, while the Nifty 50 declined 0.06% to 24,600.25. Bank of Baroda gained 1.19%, followed by Canara Bank (0.90%), Union Bank of India (0.63%), State Bank of India (0.57%), IndusInd Bank (0.46%) and Punjab National Bank (0.32%). Yes Bank was marginally higher by 0.04%. Among private lenders, Federal Bank fell 1.41%, AU Small Finance Bank declined 1.08%, Axis Bank shed 0.78%, Kotak Mahindra Bank and IDFC First Bank lost 0.60% each, while ICICI Bank and HDFC Bank slipped 0.47% and 0.30%, respectively.

The RBI revised its FY27 real GDP growth forecast upward to 6.7% from 6.6% projected in the previous policy review. Growth is projected at 7.0% in Q1, 6.4% in Q2, 6.5% in Q3 and 6.8% in Q4, with Q1 FY28 growth estimated at 7.3%. The central bank said domestic demand remains resilient, supported by strong private consumption, investment activity, services exports and government infrastructure spending.

The RBI, however, cautioned that global uncertainty, volatile energy prices, supply chain pressures, geopolitical tensions, and deficient and uneven monsoon conditions due to El Ni?o continue to pose risks to the growth outlook.

On inflation, the central bank projected CPI inflation at 5.0% for FY27, lower than its earlier estimate of 5.1%. Inflation is projected at 4.7% in Q2, 5.9% in Q3 and 5.5% in Q4, while Q1 FY28 inflation is estimated at 5.3%. Core inflation is projected at 4.3% for FY27.

The RBI said headline inflation is expected to rise mainly because of food and fuel-related supply-side pressures, while core inflation remains moderate. It added that uncertainty over monsoon conditions, global crude oil prices, geopolitical developments and global trade policies warrants caution before any policy action.

The central bank said it will continue to closely monitor incoming data and remain focused on aligning inflation with its medium-term target while supporting economic growth.

The minutes of the MPC meeting will be published on 19 August 2026. The next MPC meeting is scheduled for 5 to 7 October 2026.

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