The Indian IT sector's recent interest is seen as tactical, not structural, as banking stocks show fatigue. Rising crude oil prices are driving inflation, potentially pushing WPI higher and forcing the RBI to consider rate hikes amid currency pressure. This suggests a shift towards a stagflationary environment of slower growth and higher inflation.

RBI may have to bear forex risk to boost foreign money inflows India may need central bank support to attract dollar investments, potentially through forex deposit schemes, to cover exchange risks and offer competitive yields. Economists suggest higher subsidies from the RBI might be necessary to make such initiatives attractive for banks, especially given current global interest rates.