Ambit’s Managing Director Dhiraj Agarwal cautions that a fourth RBI rate hike could derail market momentum, citing credit growth’s recent rebound to 16‑18% from a 10‑11% trough last quarter.
Banks, which posted credit growth of 17‑20% in the last quarter, are still grappling with thin profitability as higher rates compress margins. Agarwal noted that while two or three hikes are margin‑accretive for banks in the short term, a fourth could reverse the recent upside.
Beyond banking, Agarwal flagged real‑estate and consumer discretionary as the most vulnerable, while the auto sector’s resilience depends on GST stimulus decay rather than rates. Oil price lag can also pressure margins a quarter or more down the line.
Ambit urges investors to watch RBI’s policy path closely; a fourth hike could trigger a global risk‑off as US 10‑year yields edge past 6%. Until that point, the market may endure mild stress but avoid structural damage.
Analysts remain bullish on banking estimates, but caution that credit growth’s volatility could dampen investor sentiment if the cycle extends beyond three hikes.