RBI holds repo rate at 5.25% as Indian equity indexes dip modestly

The Reserve Bank of India kept its benchmark repo rate unchanged at 5.25% on June 5, 2026, reaffirming a neutral policy stance. Alongside the rate decision, the RBI announced a package of measures to boost foreign capital inflows and support the rupee, including the removal of taxes on interest income and capital gains for eligible foreign investors in government securities, concessional terms for non‑resident Indian currency deposits, and subsidised hedging costs for certain offshore borrowings.

India’s equity markets reacted with profit‑taking pressure. The BSE Sensex fell 116.67 points, closing at 74,243.34, while the NSE Nifty 50 slipped 49.85 points to end at 23,366.70. Earlier in the session, both indexes had risen, but the downward revision in the RBI’s growth forecast (real GDP now seen at 6.6% for FY 2026‑27) and an inflation outlook of 5.1% prompted selling. Foreign Institutional Investors recorded net outflows, and global cues—including heightened geopolitical tensions and elevated oil prices—added to the cautious tone.