Markets will face pressure from rising rates and currency headwinds, impacting rate‑sensitive sectors such as banking, real estate and capital‑intensive industries, a report said on Monday.
The report from Systematix Institutional Equities said as wholesale inflation surged in April and the rupee risks breaching Rs 100 and official CPI forecasts will soon touch 6 to 7 per cent.
“The latest Rs 3 per litre fuel price hike, following the Prime Minister’s austerity appeal, is just the beginning of a larger correction,” the report forecasted.
WPI inflation jumped to 8.3 per cent in April 2026, a 42‑month high, with the fuel and power segment soaring to 24.71 per cent, and this could be a phase before the full pass‑through of recent retail fuel hikes, it said.
The finance ministry’s revised assessment of 5.5–6 per cent CPI inflation for FY27 now exceeds the RBI’s own forecast of 4.6 per cent, the report highlighted.
The fuel price hike just covered just 7–8 per cent of cumulative under‑recoveries from months of unchanged retail prices, the report cited as a reason for further hikes.
Ease in growth, widening balance‑of‑payments stress and sticky inflation will complicate monetary policy, the report added.
Agriculture enjoys some short-term support from Rabi output and reservoir levels but faces mounting risks from higher fertiliser prices, Gulf supply disruptions for urea, and the looming threat of a deficient monsoon.
With rural inflation rising faster than urban inflation, rural demand is increasingly vulnerable.
The fuel price surge comes amid escalating tensions in West Asia and the continuing blockade of the Strait of Hormuz, one of the world’s most critical energy trade routes.
Moreover, nearly one-fifth of global oil and gas trade passes through the narrow passage, and supply disruptions have pushed international crude oil prices sharply higher.
Responding to criticism over rising fuel costs, Union Minister Kiren Rijiju said India has managed to limit the increase in petrol and diesel prices despite a sharp spike in global crude prices.
He noted that several countries witnessed fuel price increases ranging from 20 per cent to nearly 100 per cent, while India’s petrol and diesel prices rose by only 3.2 per cent and 3.4 per cent, respectively.
