New Delhi: The RBI’s monetary policy committee (MPC) on Friday slashed its forecast for India’s inflation rate for the financial year 2025-26 to 2 per cent — from 2.6 per cent predicted in October due to the sharp decline in food prices and the GST rate cuts playing out. 

RBI Governor Sanjay Malhotra said that “the MPC noted that headline inflation has eased significantly and is likely to be softer than the earlier projections, primarily on account of the exceptionally benign food prices. Reflecting these favourable conditions, the projections for average headline inflation in 2025-26 and Q1 2026-27 have been further revised downwards.”

Malhotra also pointed out that core inflation (which excludes food and fuel) remained largely contained in September-October, despite continued price pressures exerted by precious metals. Excluding gold, core inflation moderated to 2.6 per cent in October. Overall, the decline in inflation has become more generalised, he added.

The RBI Governor observed that food supply prospects have improved on the back of higher kharif production, healthy rabi sowing, adequate reservoir levels and conducive soil moisture. Barring some metals, international commodity prices are likely to moderate going forward.

“Overall, inflation is likely to be softer than what was projected in October, mainly on account of the fall in food prices. Considering all these factors, CPI inflation for 2025-26 is now projected at 2.0 per cent with Q3 at 0.6 per cent; and Q4 at 2.9 per cent. CPI inflation for Q1 2026-27 and Q2 are projected at 3.9 per cent and 4.0 per cent, respectively. The underlying inflation pressures are even lower as the impact of increase in price of precious metals is about 50 bps. The risks are evenly balanced,” Malhotra highlighted.

He explained that core inflation, which had been rising steadily since Q1 2024-25, eased at the margin in Q2 2025-26 and is expected to remain anchored in the period ahead. Both headline and core inflation are expected to be at or below the 4 per cent target during the first half of 2026-27. The underlying inflation pressures are even lower as the impact of increase in price of precious metals is about 50 basis points (bps). Growth, while remaining resilient, is expected to soften somewhat.

“Thus, the growth-inflation balance, especially the benign inflation outlook on both headline and core, continues to provide the policy space to support the growth momentum. Accordingly, the MPC unanimously voted to reduce the policy repo rate by 25 bps to 5.25 per cent,” Malhotra observed.

He said that headline CPI inflation declined to an all-time low in October 2025. The faster than anticipated decline in inflation was led by correction in food prices, contrary to the usual trend witnessed during the months of September-October.

Stock market recommendations: According to Bajaj Broking Research, the top stock picks for December 5, 2025 are Max Healthcare, and Tata Power. Here’s its view on Nifty and Bank Nifty:Index View: NIFTYBenchmark indices spent the previous week oscillating within a defined consolidation band, digesting their recent up move. The Nifty registered a fresh lifetime peak of 26,325 during Monday’s trade. However, lost momentum at elevated levels amid bouts of profit-taking, triggered in part by renewed pressure on the Indian rupee, which depreciated to a record low against the US dollar. Persistent foreign portfolio outflows (FPI selling) further exacerbated currency weakness, injecting a note of caution into risk sentiment.In the near term, market trajectory is likely to be dictated by currency stabilization dynamics, especially whether the rupee can find a durable floor. Additionally, investors will be closely tracking the RBI’s upcoming monetary policy statement for cues on the central bank’s stance regarding inflation management, liquidity calibration, and potential interventions to support the rupee. On the global front, the US FOMC policy outcome will remain a critical macro catalyst, shaping expectations around global rate differentials and capital flows. Moreover, clarity on evolving India–US trade negotiations could influence sector-specific outlooks, particularly in export-linked and tariff-sensitive industries. A key observation on the Nifty daily chart is that the entire up-move over the past two months has remained well within a rising channel, indicating sustained buying interest at higher levels and reinforcing an overall positive bias.We believe the current 3-4 sessions breather should be used to accumulate quality stocks in a staggered manner for the next leg of up move towards 26,500 and then towards 26,800 in the coming weeks being the measuring implication of the recent range breakout and the upper band of the last two months rising channel.Nifty has key support in the range of 25700-25900 being the confluence of the 50-day EMA, the bullish gap from November 12 and the lower band of the rising channel of the last two months. Holding above the support area will keep the overall bias positive and only a breakdown below the support area will signal a pause in the current positive trend. NIFTY BANKBank Nifty traded in a range, digesting its last four weeks strong gains. Earlier during the week, it formed a fresh all-time high of 26114. However, profit booking at higher levels saw the index traded in a range ahead of the RBI monetary policy outcome.We expect the index to consolidate and form a base in the range of 58500-60100 in the coming sessions. A follow through strength above Monday’s high (60114) will open further upside towards 60,400 and then towards 61,000 levels in the coming weeks.The entire up move of the last 2 months is well channelled signaling sustained demand at elevated levels. Key support is placed at 58,300-58,600 levels being the confluence of the last two weeks lows and recent breakout area. Holding above the support area will keep the short-term bias positive.

Stock Recommendations:

Max HealthcareBuy in the range of ₹ 1070-1090

The stock is forming base at the 52 week EMA and the 61.8% retracement of the previous major up move (940-1314).We believe the current decline is approaching price and time wise maturity and the stock is likely to resume up move and head towards 1190 levels being the confluence of the high of November and key retracement area. The daily stochastic has approached extreme oversold territory and we expect the stock to resume its positive momentum in the coming weeks.Tata PowerBuy in the range of 381-386

Tata Power continues to trade sideways on the daily timeframe, oscillating within a well-defined range of ₹380–₹420. The stock is currently forming a rectangle pattern, with consistent buying support emerging near the ₹380 zone.Historically, the counter has shown a tendency to rebound from these lower levels and head towards the upper end of the range, which lies near ₹420.Given the prevailing price structure and renewed momentum, the stock appears poised to extend its upward trajectory, first towards the upper band of ₹420, and potentially up to ₹430, which aligns with the 127.2% Fibonacci extension of the previous swing.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)