Societe Generale\u2019s Kunal Kundu said the Reserve Bank of India\u2019s Monetary Policy Committee is expected to hold the repo rate at 5.25% and keep a neutral stance. The focus is on stability after recent oil and foreign exchange shocks.<\/p>\n
He referred to current inflation and growth conditions as favourable compared with the period around the Russia\u2013Ukraine war. February 2026 CPI inflation was cited at 3.2% year on year.<\/p>\n
India\u2019s real policy rate was put at 2.04%, compared with -2.07% in 2022. The comparison was linked to the higher inflation seen in 2022.<\/p>\n
Kundu said the US Federal Reserve is on hold at 3.50\u20133.75% and is not expected to cut rates this year. He also noted that the Fed raised rates 11 times starting in March 2022.<\/p>\n
Given the Reserve Bank of India is expected to keep the repo rate steady at 5.25%, we see a period of stability ahead. This suggests that implied volatility, which recently saw a brief spike as the India VIX touched 17 during March’s oil price jitters, should continue to decline. Traders should consider strategies that benefit from range-bound markets, such as selling options on Nifty or Bank Nifty futures.<\/p>\n
The Indian Rupee should remain stable against the US Dollar, supported by a high real policy rate of over 2%. Unlike the environment in 2022, when rapid Federal Reserve hikes pressured emerging market currencies, the Fed is now on hold, which provides a supportive backdrop for the Rupee. We believe selling short-dated USD\/INR strangles, perhaps with strikes around 84.50 and 86.00, could be a viable strategy to collect premium as the currency consolidates.<\/p>\n
With inflation relatively low\u2014the February 2026 reading was 3.2% and preliminary March data points to a similar 3.4%\u2014there is little pressure on the RBI to act. This predictability in short-term rates makes overnight index swaps (OIS) an interesting area. Traders could look to receive the fixed rate on short-tenor OIS contracts, betting that the market has overpriced the small chance of a future rate hike.<\/p>\n
We must remain mindful of the recent oil and FX shocks that are keeping the RBI cautious. The spike in Brent crude to over $95 per barrel in February 2026, though it has since eased to around $89, serves as a reminder that external factors can change the outlook quickly. Therefore, any short-volatility positions should be managed with clear risk parameters and stop-losses.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" RBI likely to hold repo at 5.25%, maintain neutral stance amid stable inflation after shocks.<\/p>\n","protected":false},"author":103,"featured_media":17028,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-46243","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t