Overview of Market
Overview
Indian equities underperformed sharply, with the Sensex falling 5.8% and Nifty 50 falling 6.1%, on FII outflows, elevated crude prices, dollar strength and multi-year-high US Treasury yields. Hawkish global central-bank signals lifted Treasury yields and the dollar while pressuring broader equities. Meanwhile, resurgent geopolitical risks drove oil higher, reinforcing inflation concerns, leading to rising real yields, pulling gold lower as a result. India’s 2026 southwest monsoon ended with a 12.6% rainfall deficit and uneven regional distribution. While the government does not expect a significant fall in aggregate kharif output, weaker yields remain a risk for paddy, pulses, oilseeds, cotton and sugarcane. Lower soil moisture may also affect rain-fed rabi sowing and productivity. Headline inflation rose to 4.8% in August, while food inflation reached ~6%. Deficient rainfall and elevated crude prices could keep near-term price pressures firm, although the extent of crude pass-through remains to be seen. RBI Governor Sanjay Malhotra said the MPC would assess inflation persistence, expectations and broadening before deciding its next move (on MPC announcement on 07th October). The month saw active regulatory and corporate developments across sectors. Financials remained in focus amidst proposed insurance-distribution reforms, stronger mutual-fund asset flow, UPI pricing changes and index rebalancing. Autos and consumer durables announced selective price increases, while technology, healthcare, renewables, industrials and hospitality witnessed acquisitions, leadership changes, regulatory approvals and capacity-expansion initiatives. During the period, US market outperformed other major markets. While TAIEX (+3.9%), Nasdaq Composite (+1.9%) and Kospi (+0.3%) gained on the back of continued strength in communication & technology stocks, BSE Sensex (-5.8%) & China CSI 300 (-4.8%) were negative due stretched valuations amidst perceived absence from the AI trade.
Fixed-Income, Currency and Commodity Markets
Bond yields hardened globally, with the US 10-year yield touching 5.3%, highest since 2002, amid Middle East tensions, resilient economic data, fiscal concerns and a hawkish Fed. India’s 10-year G-sec moved towards 7.20%, reflecting higher oil prices, anticipated higher government borrowing supply, fiscal pressures and expectations of RBI tightening. DXY rose to 101.5, driven by resilient US economic data and surging Treasury yields. USD/INR approached ₹96 on the back of elevated crude prices. Energy prices surged as geopolitical supply risks lifted Brent above US$100/bbl. Gold corrected amid higher US yields and dollar strength. Base metals remained supported by supply constraints but faced softer Chinese demand, while agricultural prices were mixed as ample global wheat supply counter balanced tighter corn balances.
Flows & sectoral performance
DIIs remained net buyers (~₹76,030 Cr), while FIIs continued to be net sellers (~₹44,013 Cr). None of the NSE major sectoral indices were positive. Sectors outperforming benchmark: Pharma (-2.75%) and Metals (-3.3%) | Sectors underperforming benchmark: IT (-11.2%), and Auto (-8.8%). Fund Performance (5-year period ending Sep’26): - Equity & Growth Funds: Annualized returns of 7–13% - Balanced & Bond Funds: Annualized returns of 6–8% (Refer to annexures for detailed fund-wise performance)
Old Method
New Method