RBI Poised for Dovish Pivot as Rate Cut Window Remains Open, Says Samvitti Capital

The Reserve Bank of India held its policy rates steady at its most recent meeting, a decision that surprised no one watching the global backdrop closely enough. Geopolitical turbulence—the ongoing war, the volatility in crude markets, the pressure on the rupee—left the central bank with little choice but to pause and wait. According to Prabhakar Kudva, director and principal officer of portfolio management services at Samvitti Capital, this caution was the only sensible move given how much remains unclear about where inflation and currency pressures will land once the dust settles.

But the pause, Kudva argues, should not be read as hesitation about the broader direction of policy. The RBI will eventually shift toward a more accommodative stance—rate cuts are coming—because growth has begun to show real signs of slowing. The question is not whether the central bank will cut, but when. That timing hinges almost entirely on how the geopolitical picture clarifies and how much of the crude-price shock feeds into inflation. By the time the RBI meets again, Kudva expects that picture to be considerably sharper, giving the regulator a much clearer read on what it actually needs to do.

For corporate earnings, the near-term outlook carries some friction. The months of March and April brought elevated crude prices, and that weight will press on Q4 of the fiscal year and into Q1 of the next one, particularly for sectors directly exposed to oil costs. But Kudva does not expect this to be a lasting wound. By Q2, as crude prices normalize and the geopolitical situation stabilizes, earnings should recover their footing. The broader economy and the corporate earnings cycle remain fundamentally intact.

On the question of when investors should actually put money to work, Kudva offers a practical counsel. After eighteen months of both price and time correction, valuations across many parts of the market have become genuinely reasonable. Investors who have been waiting on the sidelines or who have paused their systematic investment plans need to start deploying capital into equities again. A staggered approach makes sense—it always does—but stretching that deployment out over twelve to eighteen months is a trap. Markets historically bounce off their lows far faster than most people expect, and investors who plan to deploy slowly often end up chasing prices higher. The smarter play is to complete the deployment over the next few months rather than drag it out.

Retail investors in India have matured considerably through recent market cycles, Kudva observes. They have learned to buy corrections rather than panic out of them, and the latest data on systematic investment plan flows shows no meaningful slowdown despite the war. The behavior of Indian retail investors today is structurally different from what it was a decade ago—more disciplined, less reactive.

On the currency front, the RBI's intervention was timely and addressed the real gaps that had opened up. Kudva expects the central bank to continue stepping in only at the extremes, which is how a good regulator should operate. Day-to-day micromanagement of the rupee is neither necessary nor desirable. The government, meanwhile, has done substantial work insulating ordinary business activity from external shocks, with the exception of sectors directly tied to crude. If the situation deteriorates further, Kudva expects the same playbook to be deployed: calibrated fiscal support, supply-side management, and strategic reserves.

Within specific sectors, private banks and utilities both look attractive on a valuation basis, though private banks require closer scrutiny. Growth in that space is clearly slowing as public sector banks and non-bank financial companies continue to take market share. Stock selection matters far more now than it did a few years ago. As for the Strait of Hormuz and the broader geopolitical situation, Kudva believes that disruption should be behind us reasonably soon. Too much is at stake globally for it to remain a prolonged problem, and the approach of US mid-term elections in November itself creates a strong incentive for de-escalation. The world economy and markets should return to normalcy over the next few months.