Equity & Indian Market Developments

 

• Indian equity markets ended the week on a cautious positive note, supported by the RBI’s 25 bps repo rate cut to 5.25% and improved growth outlook.

 

• RBI revised FY26 inflation sharply lower to ~2%, while GDP growth was raised to ~7.3%, aiding sentiment in rate-sensitive sectors.

 

• Broader markets underperformed benchmarks: Nifty Midcap and Small cap indices declined, reflecting valuation concerns and profit-booking.

 

• FIIs remained net sellers (₹8,000+ crore MTD), while DIIs absorbed flows with strong net buying, limiting downside.

 

• IT and Metal stocks led gains on global cues and easing yield expectations, while FMCG, Media and Consumer Durables lagged on demand concerns.

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• Equity markets touched record highs during the week, but profit-booking capped further upside.

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Global Market Developments

 

US equity indices rallied strongly on dovish Federal Reserve expectations: Nasdaq, S&P 500, and Dow posted solid weekly gains.

 

• Markets are pricing in a high probability (~85–90%) of a Fed rate cut in the December FOMC meeting.

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European markets remained subdued amid weak PMI data and slowing growth indicators.

 

• Asian markets were mixed; China and Hong Kong gained on stimulus expectations, while Japan consolidated after recent rallies.

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• Global bond yields softened, reflecting easing inflation pressures and expectations of monetary policy pivot.

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Fixed Income & Debt Market

 

• Indian bond yields edged lower after dovish RBI commentary, with the 10-year G-Sec yield closing around 6.50–6.55%.

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Softer inflation outlook improved demand for longer-duration papers, though strong GDP growth limited aggressive yield declines.

 

• Corporate bond yields remained stable to slightly lower across tenors, supported by surplus liquidity and rate-cut expectations.

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• RBI conducted regular auctions of G-Secs and Treasury Bills with healthy participation, indicating stable demand conditions.

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Commodities

 

• Gold prices hovered near record highs, supported by softer US data, falling real yields, and strong expectations of a Fed rate cut.

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• Strong ETF inflows and safe-haven demand continued to provide structural support.

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• Silver surged to fresh record highs, driven by supply deficits, inclusion in critical minerals list, strong investment demand, and a weaker dollar.

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• The metal significantly outperformed gold on both WoW and YTD basis.

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• Crude oil prices edged higher, supported by geopolitical risks and technical buying, though gains were capped by weak global demand outlook.

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• Brent crude hovered near $63 per barrel, reflecting a balance between supply risks and demand concerns

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• Copper prices rallied sharply, supported by supply disruptions, falling LME inventories, and expectations of future US trade restrictions.

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• Anticipation of global monetary easing further boosted base metal sentiment.

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Macro-Economic Updates

 

• India’s Q2 FY26 GDP growth surprised positively at ~8.2% YoY, led by strong manufacturing output

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• India’s fiscal deficit widened to over 50% of Budget Estimates for Apr–Oct FY26, reflecting higher expenditure.

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• CPI inflation continued its downward trend, providing policy space for accommodative monetary stance.

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• Global macro data from the US (jobs, inflation, sentiment) indicated cooling economic momentum, reinforcing expectations of rate cuts.

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• Currency markets remained volatile; INR recovered slightly from record lows, aided by RBI actions and dollar profit-booking

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Best Regards
 

Alpha Research

 

Disclaimer:  The perspectives provided reflect our expectations of the economy, market, and investments, which may or may not materialize. Investors are encouraged to conduct their own due diligence before investing.