RBI May Hike Rates by 25-50 bps in FY27 if Energy Inflation Persists: Himanshu Kohli

• Himanshu Kohli of Client Associates predicts RBI may raise rates by 25-50 bps in FY27 if energy-led inflation broadens.
• Capex decisions are likely to be delayed due to ongoing uncertainty from the Iran war.
• Q4FY26 earnings commentaries are expected to be cautious due to West Asia developments.
• Defense sector valuations remain elevated, but the fundamental trajectory is robust, with strong export potential.
• Markets may consolidate as negativity is largely priced in, but further downside is possible if the conflict escalates.

Key Questions Answered

Will RBI hike interest rates if energy inflation continues?

The RBI may hike interest rates by 25-50 bps in FY27 if energy-led inflation persists and broadens.

How might the Iran war impact India's economy?

The Iran war could negatively impact India's economy through increased inflation and a potential slowdown in GDP growth.

Could defense stocks see further growth despite high valuations?

Defense stocks may see continued growth, with returns potentially tied to earnings rather than re-rating.