ETMarkets Smart Talk | India may see 50 bps of rate hikes in 2026 as Fed tightens: Garima Kapoor
RBI is in focus in an institutional flows development.
20 Sept 2026 · Economic Times Markets
The Fed’s latest rate hike could constrain the RBI’s policy flexibility as India-US bond yield differentials narrow. Elara Securities’ Garima Kapoor expects 25-50 bps of RBI hikes in 2026, while higher US yields and a stronger dollar could pressure FPI flows.
The analysis
RBI reported movement of 50 bps and -50 bps. Those are the figures as filed — what moves the price is how they sit against what the market already expected, not their absolute size.
This is an Index / institutional flows event. Passive and institutional flows move price independently of fundamentals, and around rebalancing dates they dominate it.
Why it matters
- Sustained FII or DII direction moves the whole market, not just the names being bought — it sets the tape's tone.
- With RBI involved, this carries a regulatory dimension that can outlast the immediate market reaction.
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