While the RBI has already injected over ₹6 trillion into the system to improve liquidity, easing banking constraints and strengthening core liquidity, Gupta believes banks will wait to transition from a liquidity deficit to a surplus before they can pass on the benefits to depositors.
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Although rate cuts might reduce bank margins (since a large part of their loan book is tied to the repo rate), non-banking financial companies (NBFCs) are expected to gain more from the lower rates.
Foreign investment in Indian markets remains a mixed bag. Gupta emphasised that while there are signs of improved equity flows, the overall sentiment will depend on global factors like softer bond yields and a lower dollar index.
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Gupta believes that the Indian economy has likely reached a bottom, bolstered by better fiscal spending and increased CAPEX. However, global headwinds—such as a cautious outlook on global growth and the impact of tariffs—mean that investors should remain careful.
He remains positive about sectors such as automobiles, financial services, and select consumption names.
For the full interview, watch the accompanying video
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