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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 The Two Scrips and a Few Points

Overseas, Asian stocks are trading lower today as investors await China's rate decision and testimony from US Federal Reserve Chair Jerome Powell for indications on the route ahead. Meanwhile, on June 16, foreign portfolio investors (FPIs) purchased shares worth Rs.794.78 crore, while domestic institutional investors (DIIs) were net purchasers worth Rs.681.33 crore in the Indian equities market.

#Buy Central Bank Ltd (Rs.26.70) near the CMP for short term targets of Rs.32/37. 

Central Bank of India recently said that ICRA Limited, a rating agency has assigned credit ratings for various bonds. The rating agency has assigned "[ICRA]AA- (Stable)" for Basel III Tier II bonds worth Rs 2,000 crores. Further, the filing noted that the rating was upgraded from [ICRA]A+(Positive). It also said that ICRA assigned "[ICRA]AA- (Stable)" to Basel III Tier II bonds worth Rs 1,500 crores and "[ICRA]A+ (Stable)" to Basel III Tier I bonds worth Rs 1,000 crores.

Rationale of the ratings assigned to the bank:

Central Bank of India receives an upgraded long-term rating due to enhanced capitalisation and solvency. Exit from RBI's PCA framework fuels growth, boosting the credit-to-deposit ratio and operating profitability. 

Sovereign ownership, government support, and declining net non-performing advances contribute to the positive rating. CBI's established deposit franchise, strong CASA base, and competitive cost of funds also play a role. 

However, asset quality concerns and stressed exposures in the corporate book remain monitorable. Lower credit costs are expected to improve the return on assets. 

A stable outlook predicts continued profitability, improved asset quality, and regulatory capital compliance.

#Buy the shares of Adani Transmission Ltd (Rs.110.90) near the CMP for short term targets of Rs.1200/1800.

Adani Transmission reported a 17% increase in consolidated revenue of Rs.3031 crore in the quarter ending March 2023. During the period, the earnings of the Ahmedabad-based electricity distributor increased by 85% to Rs.440 crore. The  operational transmission network grew by 1,704 circuit kilometres (ckm), bringing the overall length to 19,779 ckm. Another 4,408 km of transmission lines are in various phases of construction.

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