Raghvendra Nath, Managing Director at Ladderup Wealth Management, believes investors should not expect further RBI rate cuts before the first half of 2026, even as India’s earnings outlook improves meaningfully over the next year.
According to Nath, the Reserve Bank of India has already delivered around 125 basis points of cumulative rate cuts, and going forward, the central bank is more likely to rely on liquidity management, regulatory easing, and targeted measures rather than headline rate reductions to support growth and ensure effective transmission.
RBI to Shift Focus from Rates to Transmission
Nath said the RBI now has sufficient room to pause and assess how lower rates feed through the system. Instead of cutting rates further, the focus will likely be on:
- Ensuring faster transmission to borrowers
- Managing liquidity conditions proactively
- Using macroprudential tools to balance growth and inflation
This approach, he noted, helps preserve monetary credibility while still supporting economic momentum.
Earnings Recovery in Sight
On the corporate side, Nath remains optimistic, projecting double-digit earnings growth in the next financial year. He expects:
- A rebound in consumption as financial conditions ease
- Stable margins supported by moderating input costs
- Continued strength in sectors such as financials, industrials and select consumption plays
Market Implications
With rate cuts largely priced in, equity markets are likely to be driven more by earnings growth and stock-specific factors rather than monetary policy triggers. Nath advised investors to maintain a medium-term perspective and focus on quality businesses with earnings visibility.
In summary, while monetary easing may pause, India’s earnings cycle appears set to strengthen, offering support to equities even in the absence of near-term rate cuts.
