The Reserve Bank of India left the repo rate unchanged at 5.25% at its last meeting. But the clamour for an interest rate hike at the October meeting is growing louder, especially after retail inflation in August rose to a multi-month high of 4.82%, driven by food inflation. Plus, the rupee has weakened to ₹96 per dollar. Amid this, Indian equities are feeling the heat. The MSCI India index is down 7.5% in 2026 but trades at a one-year forward price-to-earnings multiple of 17, a premium to peers in Asia and emerging markets, according to Bloomberg data.
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