DBS Bank: Indian market expected to reflect interest rate hike anticipation.

Radhika Rao from the Research Department of DBS Group wrote in a report that the Indian market may increasingly reflect expectations of a rate hike from the Reserve Bank of India in June. If the rupee continues to be under pressure, and the resolution of the US-Iran conflict remains uncertain, the situation will be especially so. Rao mentioned that authorities are concerned that allowing the rupee to weaken unchecked could exacerbate further depreciation instead of helping to rebalance the external account. Rao added that the Reserve Bank of India has also signaled that measures will be taken to stabilize the exchange rate, including exploring potential rate hikes. Rao said, "The gradual rise in fuel prices, the rebound in food prices, and the warming of corporate inflation expectations also provide stronger support for the inflation argument."