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“The most likely policy action is a ‘hawkish hold’, that is, the RBI would hold the rates without any change but would send a hawkish message that inflation is set to rise and, therefore, expect rate hike later this year. If the RBI decides to act now with a 25bp rate hike, that will move the banking stocks sharply upwards since they would benefit from rate hikes. However, a rate hike would be negative for interest elastic segments like automobiles and real estate.”