Indian equity markets are bracing for the Reserve Bank of India's (RBI) bi-monthly monetary policy announcement scheduled for Friday, 6th December.

While Sensex and Nifty surged 1 percent today, market participants are looking at a liquidity boost, keenly watching if RBI Governor Shaktikanta Das and the Monetary Policy Committee (MPC) will opt for a repo rate or cash reserve ratio (CRR) cut amid signs of an economic slowdown.

The majority of economists surveyed by Bloomberg and Moneycontrol expect the RBI to keep the repo rate unchanged at 6.5 percent, citing persistently high inflation and a neutral policy stance adopted in the October meeting. However, a few anticipate a 50 basis point CRR cut, which could infuse Rs 1-1.25 lakh crore into the banking system, potentially supporting credit growth and investments.

Recent economic data showing a sharper-than-expected slowdown in GDP growth to 5.4 percent for the July-September period has raised questions about whether restrictive monetary policies are dampening activity. Experts said this has heightened the need for liquidity-enhancing measures.