New Delhi, July 18 -- India is likely to remain a key outperformer in the second half of FY27 as robust growth, sustained capital expenditure, credit expansion and a structural build-out in power and infrastructure support earnings, even as a renewed inflationary cycle could lead to higher interest rates later in the fiscal. The base case remains one of reflation and inflation, with equities expected to benefit from earnings and flows before a potential 25-50 basis point rate hike by the Reserve Bank of India in H2FY27, according to a report by LLama Research.

The report has raised the probability of an inflation-up scenario to 52 per cent from 40 per cent earlier, while reducing the probability of a disinflation-led Goldilocks scenario ...