The Reserve Bank of India may lower interest rates by 25 basis points later this year, though inflation trends remain crucial for the rate decision, said, director at Citi India . In an interview tohe said Sensex earnings growth for the fiscal year 2017 would be around 14 per cent, and is overweight on private banks, fourwheelers, cement and utilities. Edited excerpts:The Reserve bank of India’s move to hold interest rates in June policy meeting is in-line with our expectations, and we expect the central bank to reduce rates by 25 basis points later this year. However, inflation trends remain crucial for interest rate decision going forward, and monsoon is also something to keep an eye on. People are looking at headline monsoon numbers, which suggest that rains are expected to be above normal, but what is also important is distribution of rainfall across various regions.The corporate earnings for the March ending quarter, ex-financials, have been quite decent. Earnings growth excluding financials have been around high teens, compared to expectations of single-digit growth, hence, earnings season that has just concluded has been significantly better than what people had earlier expected. If you look at BSE 100 index, 47 companies have beaten Street expectations, while 41 have missed. Hence, this ratio is very decent compared to what we have witness in the last 2 years. Going forward, for fiscal year 2017 we have earnings growth expectations of around 14 per cent for Sensex, and are overweight on private banks, four-wheelers, cement and utilities.We are seeing interest from foreign investors on India increasing, after some of the high-frequency macroeconomic numbers have shown signs of improvement along with some recovery in corporate earnings. We are getting more questions about India from global investors and would mention that people are mostly overweight on India and following the markets very closely.The two important sectors where we have underweight positons are IT and consumer staples. If you look at software services revenue, most of the large companies have missed sales expectations and business has been challenging for a while. When it comes to profitability, most of the companies are under pressure when it comes to margins, despite significant tailwind from currency. The legacy business is showing slowdown, while the new businesses are seeking investments, overall this is making things difficult for the sector. Consumer staple sector is witnessing high valuations which is around 35-40 times earnings, while the volume growth is about mid-high single digit. The emergence of Patanjali is also increasing competitive intensity in some categories. The banking space remains crucial for performance of broader markets.We are close to the bottom when it comes to some of the issues regarding bad loans. We think on risk-adjusted basis, private banks are still better bets than state-owned banks. Our analysts have buy ratings on few PSU banks. Citi had a view that the US Federal Reserve would increase interest rates in later part of this year. The probability of interest rate hike in this summer had increased over last one month, however the recent employment numbers suggest that rate hike may not happen in June-July.