Indian equity markets are on edge ahead of the Reserve Bank of India's (RBI) monetary policy announcement scheduled for December 5. The Sensex and Nifty have recently surged 1 percent, leading market participants to eagerly anticipate potential liquidity measures from RBI Governor Shaktikanta Das and the Monetary Policy Committee (MPC).

Most economists surveyed by Bloomberg and Moneycontrol expect the RBI to maintain the repo rate at 6.5 percent due to persistently high inflation and a neutral policy stance from the October meeting. However, some analysts predict a possible 50 basis point cut in the cash reserve ratio (CRR), which could inject between Rs 1-1.25 lakh crore into the banking system, thereby bolstering credit growth and investments.

Recent economic data reveals a sharper-than-expected slowdown in GDP growth to 5.4 percent for the July-September period, intensifying discussions about the impact of restrictive monetary policies on economic activity. Experts emphasize the urgent need for liquidity-enhancing measures to support the economy amid these challenging conditions.