We preferred India equities over the U.S.; in the event both performed well. We predicted geopolitics would remain a headwind, we expected domestic flows would improve, and noted that RBI rate hikes typically preceded equity rallies.
In the current interest rate hike cycle, RBI started raising the repo rate from May 2022; since then, it has raised 250 bps in repo rate to 6.50 per cent
RBI MPC meet 2022: The MPC is expected to hike the policy rate from 5.90 per cent currently as inflation is above the central bank’s tolerance band, 2-6 per cent.
The rate hike was widely expected as inflation rose to 7.00 percent in August, up from 6.71 percent in July, and it is expected to remain sticky in the coming months.