"Any further interest rate hike to push corporates over default cliff...any interest rate hike in the next three to six months may wither even the signs of green shoots," it said, arguing for rates to be kept on hold till September.
RBI is scheduled to announce monetary policy on Tuesday. It is widely believed that the central bank is likely to leave the rates unchanged as the core inflation remains sticky, even though overall inflation rates have been trending down.
The report said a rate hike of either 0.25 to 0.50 per cent by RBI in the next two quarters will push the number of stressed companies in the BSE-500 companies by 14-15 per cent.
The credit rating agency said its analysis of BSE-500 companies suggests that the stress on the balance sheet debt will grow to 16 per cent in case of rate hike from the 15 per cent in December last.
Analysts expect RBI Governor Raghuram Rajan to hold rates at the review, given that there has been some cooling in the consumer price based, or retail inflation, and the February's 8.1 per cent is close to the RBI target of having it at 8 per cent by January 2015.
However, some challenges persist in the form of recent instances of unseasonal rains as well as a likelihood of a rainfall deficit in some areas -- both of which will push up prices. The El Nino factor may also be looked into by RBI.
At the last review on January 28, Rajan unexpectedly went in for a 0.25 per cent hike in the repo rate.
On reports of a likely improvement in the economy in the recent months, the ratings agency said that this is yet to translate into credit metrics.
"Credit metrics continue to deteriorate, although at a much slower rate than during FY11-FY13," it said. It also said the interest rate transmission has improved since last August.
On the upcoming elections, it said the last six general elections observed a spike in consumer inflation post- elections and conceded that there may be pressures to hike the rates in the next 12-18 months.