While he cautioned that supply-side disruptions “will have consequences both on growth and on inflation,” he also believes availability of water, adequate food stocks and the government’s management of energy supplies should help cushion the impact.
Bajoria said the weak start to this year’s monsoon should not be viewed only through the rainfall deficit but also through the uneven distribution of rainfall. “What we really see is the erraticness of the rainfall cycle,” he said, adding that although rainfall improved in July, “this is something that I think will remain a very important talking point for markets at least over the next six to 12 months.”
Bajoria does not expect a rate hike in the upcoming US Federal Reserve, but believes the tightening cycle is not over. Further rate increases in the US could put pressure on the rupee, Indian bond yields and domestic financial markets.
He also expects the Reserve Bank of India to consider additional rate hikes later in the year once there is greater clarity on inflation after the festive season.
Despite the volatility in commodities, Bajoria remains positive on gold, saying demand from central banks, consumers and persistent inflation concerns should continue to support prices.
He is also constructive on industrial metals over the medium term, expecting AI-related infrastructure investments to drive demand. In contrast, he is less bullish on energy prices, expecting supply conditions to improve if geopolitical tensions ease.
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On the broader market outlook, Bajoria said corporate earnings have delivered some positive surprises, while healthy credit growth remains a strong indicator of demand. However, higher energy and commodity costs continue to weigh on company profits.
“We remain a little bit more cautious around the profitability cycle,” he said, adding that a recovery in global energy supplies could make the second half of the financial year, 2026-27 (FY27), more favourable for corporate earnings.
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