The RBI Hikes, Thursday Breaks the Low, and Friday Breaks the Streak

Nifty rose 0.44% to 22,520.45, ending eight straight weekly losses — the longest run in 25 years — but only after a round trip that took it to an 18-month closing low on Thursday. In between, the RBI raised the repo rate to 5.50%, its first hike since February 2023, and turned its stance to calibrated tightening. Friday's 1.3% rally, the sharpest in over two months, came courtesy of TCS.

Eight Becomes Nine — in the Other Direction

A rebound, a rate hike, a fresh low and a rally, in that order

The streak ends at eight

Nifty 50, weekly change, by week ending. The green bar is this week.

Aug 14−0.83%

Aug 21−0.47%

Aug 28−0.31%

Sep 4−1.15%

Sep 11−2.09%

Sep 18−0.22%

Sep 25−0.88%

Oct 1−3.11%

Oct 9+0.44%

The week split cleanly in two. Monday and Tuesday were the catch-up India never got on October 2: with the weak US jobs report and Wall Street's rally to price in, Nifty added 1.6% across two sessions and India VIX, which ended last week at 14.4, dropped 8% on Tuesday to 13.59 as Brent slipped below $100. Then Wednesday's rate hike stopped the rebound, and Thursday undid it — a 1.64% fall to 22,231.80, its lowest close since April 7, 2025, with an intraday dip to 22,179.90 that undercut the previous 52-week low of 22,182.55 by about two and a half points. Oil spiked on reports the Pentagon was preparing strikes on Iran, and US yields hit a 24-year high. Midcaps and smallcaps fell more than 2.4%.

Friday turned it around. TCS reported September-quarter revenue of ₹73,188 crore, up 11.2% year on year, with net profit up about 15% to ₹13,884 crore, a 24% operating margin and annualised AI-related revenue above $3.1 billion. TCS shares rose 3.85%, the Nifty IT index 3.02%, and the benchmark 1.30% — its sharpest single-day gain in more than two months. Trent topped the Nifty on strong quarterly sales, up 13.1%. For the week, Nifty gained 98.50 points to 22,520.45 and the Sensex 562.63 points, or 0.78%, to 72,472.33. Nifty remains about 15% below its 52-week high.

5.50%, Unanimously — and a Stance Change That Did the Talking

The first increase in more than three and a half years, with the inflation forecast pushed to the top of the band

On Wednesday the Monetary Policy Committee raised the repo rate by 25 basis points to 5.50%, its first hike since February 2023, reversing a fifth of the 125 basis points of cuts delivered in 2025. All six members voted for it. The standing deposit facility moves to 5.25% and the MSF and Bank Rate to 5.75%. More consequential than the move was the stance: neutral became calibrated tightening, with the resolution saying the next step can only be another hike or a pause, and that cuts are off the table in the near term. Two members, Nagesh Kumar and Ram Singh, would have preferred to leave the stance alone.

The reasoning was the oil-and-food story this newsletter has been tracking for weeks, now in the RBI's own numbers. Governor Sanjay Malhotra's statement put India's crude basket at about $116 a barrel in September, up from $82 in July, and noted that the southwest monsoon finished 13% below its long-period average with El Niño conditions threatening the rabi crop. Core inflation rose to 4.2% in August after three months at 3.9%. Against that, growth is strong enough to absorb a hike: the economy grew 7.8% in the April–June quarter, and the full-year forecast went up, not down.

One thing the RBI did not do was drain liquidity. Bond traders had priced in a temporary CRR increase alongside the hike; it never came, with banks still holding an average daily surplus of about ₹5.9 lakh crore since the August meeting. Malhotra described the stance change as a "milder form of tightening" that is data-dependent rather than pre-set, and said the RBI would work to let the rupee find a stable level, adding that by several measures it looks undervalued. The minutes are due on October 21; the next decision is December 4.