The Repo Rate Hike: Inflation Gave the Cover, the Rupee Gave the Reason

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SumanSpeaks Independent Capital Markets & Geopolitical Intelligence RBI Policy Decoded The Repo Rate Hike: Inflation Gave the Cover, the Rupee Gave the Reason The RBI raised the repo rate by 25 basis points to 5.50 percent on 7 October 2026. With the rupee at ₹96.78 to the dollar, the Fed at 3.75–4.00 percent and bank credit growing near 18 percent, the fuller story is bigger than August CPI of 4.8 percent. The Reserve Bank of India raised the repo rate by 25 basis points to 5.50 percent on 7 October 2026. It is the first hike since February 2023, and the stance has moved from neutral to calibrated tightening. The rate decision was unanimous. The Governor cited inflation. The Monetary Policy Committee said the inflation outlook is no longer as comfortable as it was last year, and near-term rate cuts were taken off the table. That is the official story, and it is not wrong. But it is incomplete. Look at what surrounds the decision: a rupee near its record...
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Power sector shares sizzle on hopes of reforms
 Suzlon Energy Ltd was recommended today at Rs.16.90, for a target of Rs.22. But the stock has the potential to become more than double from the current price.
Shares of 17 firms operating in the power sector rose by 0.87% to 6% at 12:09 IST on BSE on reports the cabinet may meet next week to take more reform steps such as improving the finances of power utilities.
Reliance Infrastructure (up 6%), Lanco Infratech (up 5.45%), JSW Energy (up 5.03%), GMR Infrastructure (up 4.66%), Bhel (up 4.29%), Reliance Power (up 3.96%), Adani Power (up 3.7%), Tata Power (up 3.29%), Crompton Greaves (up 3.26%), Torrent Power (up 2.55%), NHPC (up 2.47%), Suzlon Energy (up 2.36%), ABB (up 2.14%), Power Grid Corporation of India (up 2.14%), Siemens (up 1.85%), NTPC (up 1.74%) and Thermax (up 0.87%), edged higher.
The BSE Power index was up 2.79% at 1,960.28. It outperformed the Sensex, which was up 1.80% at 18,680.32.
The BSE Power index had underperformed the market over the past one month till 20 September 2012, falling 1.05% compared with the Sensex's 3.72% rise. The index had also underperformed the market in past one quarter, rising 2.52% as against Sensex's 8.60% rise.
A recent media report suggested that as part of the renewed push to big bang economic reforms, the Manmohan Singh government is likely to clear a proposal to restructure the debt of state electricity boards (SEBs) and power distribution companies (discoms) to revive the ailing sector.
According to Reserve Bank of India data, the power sector has a total outstanding debt of Rs 344980 crore, or 7.94% of the banking sector's non-food credit as on 27 July 2012.
Report suggested that the discoms do not have enough money to buy power as a result of which even power surplus states such as Himachal Pradesh are suffering as well. The government's plan proposes to restructure a part of the loans given to discoms. Half of these loans would be transferred to the respective state government in lieu of which discoms would issue bonds.
Under the arrangement, companies would reportedly have to service only the interest on reduced loans while state governments would service interest on the bonds. Banks and financial institutions are expected to reschedule the rest of the loans with a moratorium of up to three years on repayment of the principal amount, the report added.

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