Enam’s Sridhar Sivaram Sees Golden Phase for India, Expects 50 bps RBI Rate Cut in June
With signs of slowing consumption and credit growth, Sivaram believes a rate cut is needed to stimulate demand, especially in sectors like real estate.
Rbi Rate CutIndian EconomyReal EstateEquity MarketsGoldReal EstateMay 27, 2025
Inflation in the country could average between 2.5% and 3% over the next nine months, a level last seen in 2018-19. With signs of slowing consumption and credit growth, he believes a rate cut is needed to stimulate demand, especially in sectors like real estate.
Sivaram added that the RBI has room to act, but further easing will depend on the global environment. “If we get support globally, we could see 100 bps of rate cuts.”
Equity markets may continue to trade sideways. “This is a year where we are going to see these ups and downs. It could be range-bound,” he said. He advised investors to focus on specific stocks rather than trying to time the market.
“The market will give multiple opportunities this year,” he said. “When markets go up, you will feel like you have missed out, and then you will get an opportunity when they come off.”
Sivaram sees strong potential in power equipment as India expands its energy capacity. “If you see India, we will possibly double our solar and wind, and may add 60-70 gigawatts of thermal,” he said. He expects this to benefit the full value chain in the power sector.
He also highlighted the trend of financialisation of savings as a long-term opportunity. “If you think our markets will give 15% compounded annual growth rate (CAGR) returns over a longer period, mutual funds and wealth advisors can compound at least 20% over five years.”
Sivaram remains positive on gold, despite recent high returns. “We have had a 50% jump. You can’t have 50% returns in gold every year,” he said. However, he believes central bank policies will continue to support gold prices. “I don’t understand Bitcoin, so I prefer gold.”
Sivaram pointed out that a potential rate cut may hurt bank margins in the short term. “At least 30 to 40% of loans are linked to marginal cost of funds-based lending rate (MCLR), so as soon as there is a rate cut, your net interest margins (NIMs) immediately take a hit,” he said. He expects the market to be prepared for this and sees mid-teen earnings growth in large banks if credit quality improves.
While global conditions remain uncertain, Sivaram emphasised the relative strength of India’s macro indicators. “Global macro is looking challenging. Indian macro is looking extremely good,” he said.
Frequently Asked Questions
What does Sridhar Sivaram expect from the RBI in June 2025?
Sridhar Sivaram expects the Reserve Bank of India (RBI) to cut interest rates by 50 basis points (bps) in its upcoming policy announcement on June 5, 2025.
What is the predicted inflation rate in India over the next nine months?
Inflation in India is predicted to average between 2.5% and 3% over the next nine months.
How does Sivaram view the potential impact of a rate cut on bank margins?
Sivaram points out that a potential rate cut may hurt bank margins in the short term, as at least 30 to 40% of loans are linked to the marginal cost of funds-based lending rate (MCLR), which would immediately impact net interest margins (NIMs).
What sectors does Sivaram see as having strong potential in India?
Sivaram sees strong potential in power equipment and the financialisation of savings. He expects India to double its solar and wind capacity and add 60-70 gigawatts of thermal energy, benefiting the full value chain in the power sector.
What is Sivaram's stance on gold and Bitcoin?
Sivaram remains positive on gold, despite recent high returns, and believes central bank policies will continue to support gold prices. He prefers gold over Bitcoin, which he does not understand.
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