New Delhi, Sept. 17 -- Indian markets are bracing for monetary policy tightening, with expectations of a half-percentage-point repo rate hike by December strengthening after the US Federal Reserve raised rates by a quarter percentage point and signalled another hike later this year.

Markets will closely watch the 7-October Monetary Policy Committee (MPC) meeting, where the Reserve Bank of India's (RBI's) rate-setting panel is expected to end its almost year-long easing cycle with a 25-basis-point (bp) rate hike, according to at least five market participants. One basis point is one-hundredth of a percentage point.

The market participants expect the central bank to raise the rate at which it lends short-term funds to banks again in Decem...