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The RBI meeting began on December 6 to review the country’s monetary policy

El-Erian said the Fed may well tolerate higher inflation instead of pushing the economy into recession to hit its 2% target. But he also said investors are over-reacting by pricing in sharp rate cuts. Market prices have swung wildly in recent days as traders bet on a drop in borrowing costs amid signs that inflation is falling and comments from Fed Chair Jerome Powell that the actions taken so far have pushed policy "well into restrictive territory."

Asian shares advanced as a further US labor-market slowdown reinforced speculation the Federal Reserve will be able to cut interest rates next year to prevent a recession. Benchmark indexes rose over 1% in Japan, the most in three weeks. Stocks in Australia and South Korea also advanced while futures in Hong Kong pointed to gains.

The RBI has been a player on both sides of the market and intervening as a seller and buyer depending on the situation. That said, the bias has been to soak up inflows into domestic markets, preventing an appreciation of the rupee.

Brokerage house B&K Securities sees an around 10 percent upside potential in benchmark Nifty in the next 12 months but flows could take the Nifty much higher