New Delhi, Oct 10 (NationPress) The financial landscape in India showed consistent stability in September, mirroring the conditions observed in August, according to a recent report. It suggests that the Reserve Bank of India (RBI) might consider a reduction in the repo rate during its forthcoming meetings.

Crisil’s Financial Conditions Index (FCI) highlights several factors contributing to this steady sentiment, including a slight uptick in bank credit growth, more favorable lending rates, a modest increase in equity markets bolstered by Goods and Services Tax (GST) adjustments, and stable crude oil prices.

Despite these positive indicators, equity markets experienced a dip in the latter part of the month, influenced by the US's new tariffs on pharmaceutical imports and the anticipated repercussions of increased H-1B visa fees on the IT sector.

Even though the FCI stands at -0.6 for September, it remains below the average of -0.4 recorded this fiscal year.

The report identifies four key pressure points affecting the FCI: outflows of Foreign Portfolio Investment (FPI), depreciation of the rupee, a dwindling surplus in systemic liquidity, and an uptick in the yield of 10-year government securities (G-sec).

FPIs have been withdrawing from equities for the third consecutive month amid ongoing worries regarding US tariffs. Concurrently, net inflows into the debt market showed a slight decline. This outflow has added pressure to the rupee, which has now reached an unprecedented low against the dollar.

In light of these developments, the RBI is projected to lower the repo rate in its upcoming meetings.

"We anticipate that the Monetary Policy Committee of the RBI will implement another rate cut this fiscal year, given the external pressures on economic growth and manageable inflation levels," the report stated.

The tariffs from the US and a deceleration in global growth are expected to adversely affect India’s exports in the latter half of fiscal 2026. Heightened global uncertainties may also hinder private investments.

Nevertheless, factors such as low food inflation, potential repo rate cuts, and tax relief measures are likely to provide some support.

The report forecasts that inflation will remain moderate.

While GST rationalization is expected to contribute to lowering inflation, the overall effect will depend significantly on the extent of the pass-through. Furthermore, rate cuts by the US Federal Reserve (Fed) are likely to enhance monetary flexibility.