Macro
The RBI is done cutting. Banks haven't noticed.
By the CapitalCode desk · 6 min read
Foreign portfolio flows turned net positive into Indian equities last week for the first time in eleven sessions. The signal is small — ₹1,847 cr — but the composition matters. Banks took 62% of inflows; capital goods another 19%.
Our read: the rate-cut cycle is closer to its terminal than the curve implies. Three of the top five PSU banks are still pricing in 50 bps of easing through FY27. We think they get 25.
Fig. 01 — FPI flows into financials, last 13 weeks (₹ cr). Red: net inflows. Source: NSDL.
A 25-bp re-pricing puts SBI fair value at ₹920, ICICI at ₹1,360. We're long both since March; the trade thesis just got harder to argue against.
This Week's Calls
Three convictions, one we're watching.
Defence order book has compounded 31% YoY. Hold; trail stop tighter into Q1 results.
Dollar strength + ETF unwinds. Position sized at 2.1% of book.
Pharma re-rating is real but uneven. Waiting for the print on May 22 before sizing.