Uday Kotak expects another 50–75 basis points of rate hikes

Uday Kotak expects the Reserve Bank of India to raise rates further, after its first increase this year.

He predicts another 50–75 basis points of repo rate hikes, which he says are weighing on long-term bonds.

His warning comes after foreign investors sold Indian shares amid high valuations, a global AI rally and conflict in West Asia.

Higher oil prices could widen India's current account deficit because the country depends heavily on imported oil.

Kotak says the deficit was $26 billion in 2025–26 and expects it to reach $65–70 billion in the current financial year.

Indian shares may now look more attractive to foreign investors because their prices have fallen relative to global markets, while India continues to offer faster growth.

About $700 billion in foreign portfolio investment remains in Indian markets, leaving them exposed to shifts in global investor flows.