Whalesbook
### RBI's Measured Stance and Real Estate Focus
The Reserve Bank of India (RBI) concluded its monetary policy meeting by keeping the policy repo rate steady at 5.25%, maintaining its neutral monetary policy stance. Governor Sanjay Malhotra announced significant measures to deepen the financing pool for the real estate sector, permitting banks to lend to Real Estate Investment Trusts (REITs) with specified prudential safeguards. This move is expected to enhance long-term funding visibility and stimulate investment within the property market. The central bank maintained a positive outlook on economic growth, projecting real GDP growth at 7.4% for FY26, while slightly revising inflation projections upward to 2.1% for FY26, largely due to rising precious metal prices.
Sectoral Divergence: FMCG and Banking Shine, IT Falters
Friday's trading session saw a pronounced divergence in sectoral performance. The Fast-Moving Consumer Goods (FMCG) and private banking sectors were primary drivers of the late market recovery. ITC emerged as a significant gainer, rallying over 5%. This surge in ITC's stock was partly attributed to its Q3 FY26 results showing a 7.1% revenue increase and a 5.6% stock jump, alongside an influential analyst's view that the stock was undervalued and targeted a higher price range. Kotak Mahindra Bank, Hindustan Unilever, Bharti Airtel, Bajaj Finance, Power Grid Corporation, and Bajaj Finserv also registered gains, contributing to the benchmark indices' positive close. In stark contrast, the domestic Information Technology (IT) sector continued its underperformance. Stocks such as Tata Consultancy Services, Tech Mahindra, Adani Ports, Asian Paints, and HCL Technologies experienced declines. Tech Mahindra, despite some intraday recovery, remained under pressure, trading below its short-term moving averages.
Global Cues and Investor Sentiment
Global markets exhibited a mixed trend, with Asian indices like South Korea's Kospi, Shanghai's SSE Composite, and Hong Kong's Hang Seng closing lower, while Japan's Nikkei 225 rose. European markets were predominantly higher, but US markets ended Thursday's session in the red, with the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average posting declines. This weak global sentiment, coupled with geopolitical uncertainties such as US-Iran talks and rising crude oil prices, weighed on investor sentiment. Foreign Institutional Investors (FIIs) offloaded equities worth ₹2,150.51 crore on Thursday, signaling cautiousness among overseas players despite the domestic market's late recovery. The Indian Rupee also depreciated, closing at 90.70 against the US dollar.
Market Outlook and Sectoral Trends
The RBI's decision to allow banks to lend to REITs is poised to benefit the real estate sector, which has seen substantial price appreciation in major cities. While India's REIT market penetration remains lower than global benchmarks, growth is expected, driven by diversification into alternative assets like logistics and data centres. The banking sector, meanwhile, reported robust credit growth and strong asset quality in Q3 FY26, though Net Interest Margins face pressure from rising deposit costs. The IT sector, however, faces ongoing challenges, with analysts noting pressure on margins and a need for strategic adaptation amidst global economic shifts. The outlook suggests continued sector-specific performance divergence, with investors closely monitoring the impact of the RBI's policy on credit flow and inflation dynamics.