Week in Focus: RBI Repo Rate Call, Auto Dispatches, FII Buying & Overseas Cues Amid Volatility
Indian markets face a pivotal week starting December 1, 2025, dominated by the RBI's Monetary Policy Committee (MPC) verdict on December 5 amid split economist views on a potential 25 bps repo rate cut to 5.25% versus a pause, influenced by October's record-low CPI inflation (2.6% core) and robust Q2 GDP exceeding 8%. Auto dispatch data (expected double-digit YoY growth across PVs/CVs) and FII/DII flows—FIIs net sellers (~₹12,500 Cr outflow in early Nov) offset by DII buying (₹16,600 Cr)—will interplay with global cues like US jobs data and ECB signals amid volatility.
RBI MPC: Rate Cut or Status Quo?
The MPC meets December 3-5, with Governor Sanjay Malhotra announcing outcomes Friday; repo stands at 5.5% after 100 bps easing since February. Dovish camps (Deutsche Bank, Morgan Stanley) eye a cut on sub-3% inflation forecasts for FY26 Q4 and liquidity needs, projecting neutral-to-dovish guidance with FY26 inflation at 4%+. Hawks (SBI Research, ICRA) favor pause post-Q2 GDP strength, citing balanced real rates (1-1.5%) and BoP support; markets price ~60% cut odds, impacting banking/NBFC stocks.
Auto Sales Data: Growth Momentum Check
November wholesale figures (due early week) forecast 13-15% YoY rise: PVs +13% (Maruti ~2.1L units, M&M/Tata +18%), CVs +15% (Ashok Leyland/Tata +18%), tractors +7%, fueled by GST cuts, rural demand, and festive tailwinds after October's 15.8% PV surge to 399K units. Weakness risks from elevated discounts or inventory; positive prints lift auto/ancillaries amid stable fuel prices and financing.
FII/DII Activity and Flows
FIIs sold net ₹12,500 Cr in early November (gross buys ₹58K Cr vs. sales ₹60K Cr), chasing US/China AI/tech amid risk aversion, though IPO investments hit ₹10,700 Cr; DIIs countered with ₹16,600 Cr net buys via SIPs/reforms. Week's cash segment data (Nov 28: FII gross ₹10K Cr, DII ₹13K Cr) signals DII dominance; sustained outflows pressure Nifty (near 24,000), favoring domestics in financials/FMCG.
Global Cues Amid Volatility
US non-farm payrolls (Friday), manufacturing/services PMIs, and Fed's Powell speech steer sentiment, with ECB policy and China's sessions adding layers; Dow/S&P bullish on rate-cut bets, but JPY weakness/BoJ hikes loom. Rupee at ~84/USD faces pressure from FII exits; oil below $70 aids macros, but volatility spikes if RBI surprises.
Markets hover cautiously; dovish RBI + strong autos could push Nifty to 24,500, but FII selling caps upside—watch volatility index.
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