RBI Hints at Scope for Further Rate Cuts
The RBI published minutes of its October MPC meeting, signalling that there was still space for more rate cuts even as members urged caution due to an uncertain outlook. For the second straight meeting, the MPC kept policy rates unchanged at 5.5%, after cutting 100 bps between February and June 2025. Members agreed that the full impact of the government’s recent fiscal measures — including GST reductions — was yet to reflect in the economy. Moderating inflation gives the RBI headroom for future cuts.
Trade Deficit Hits 11-Month High
India’s merchandise trade deficit widened to $32.15 billion in September — its highest in 11 months — largely due to 50% tariffs imposed on Indian exports by the US. Despite this, exports rose month-on-month to $36.38 billion, while imports surged to $68.53 billion. The services trade surplus could offset less than half of this gap, suggesting that Q2 current account deficit (CAD) figures, due in December, may show significant widening.
Government Plans Mega PSU Bank Mergers
The Government of India is drafting an ambitious PSU bank merger blueprint aimed at building larger and more competitive entities through scale. The process is targeted for completion before FY27. Smaller banks such as IOB, CBI, BOI and BOM may be merged with larger banks like PNB, BOB or SBI to improve efficiency and reduce costs. The PMO is expected to directly oversee the initiative.
UBS Sees Possibility of 50 bps Rate Cut
A research note from UBS projects that the RBI may cut rates by 50 bps this year. Key factors include softer food inflation driven by a strong monsoon, a weaker rupee partly offset by lower energy prices, and excess capacity in China pushing commodity prices lower across Asia.
India May Boost US Oil Purchases
India is considering buying up to $15 billion worth of additional crude and gas from the US annually, provided pricing is competitive with Russian offers. The Commerce Minister indicated that imports from the US had halved in recent years, but India was open to restoring previous levels to diversify sources and strengthen strategic ties with Washington.
Mehli Mistry Emerges as Key Tata Group Influencer
In the continuing Tata Group power struggle, Mehli Mistry has taken center stage as a close ally of Ratan Tata and a decisive boardroom voice. His recent vote against former bureaucrat Vijay Singh on the Tata Sons board showcased his influence. Interestingly, Mehli Mistry is Cyrus Mistry’s first cousin and Noel Tata’s brother-in-law, underscoring the complex family dynamics within the group.
Axis Bank Profit Falls 26% in Q2FY26
Axis Bank’s Q2 net profit slipped 26% to ₹5,090 crore due to higher loan-loss provisions. Total income rose 1% to ₹37,595 crore, while gross slippages reached ₹5,696 crore. NPAs worth ₹3,265 crore were written off, causing net interest margins to dip 7 bps to 3.73%. Provisioning was up 61% year-on-year, though capital adequacy remained healthy at 16.55%.
RBI Monitors Speculative Shorting of Rupee
The RBI has warned of heavy speculative short positions in the rupee across offshore markets like Singapore and Dubai. To defend the currency around ₹89 per USD, the central bank has been selling dollars from its forex reserves. While this curbs volatility, it also drains reserves and adds domestic liquidity, posing a delicate policy balance.
