Macro and
Equity Market
Outlook
Equity Market
Outlook
GLOBAL MACRO & MARKETS
India’s NSE NIFTY 50 index ended the month of March 2026 in red (-11.3%).
Among major global indices, the Japanese NIKKEI (-13.2%), Morgan Stanley
Capital International (MSCI) World (-6.6%), the Euro 50 (-9.3%) and the S&P
500 (-5.1%) ended the month of March 2026 with negative returns.
Performance was negative among Emerging Market (EM) indices as well,
with the MSCI EM, Hang Seng, BOVESPA Brazil recording sequential
returns of (-13.3%), (-6.9%), and (-0.7%) respectively.
The London Metals Exchange (LME) Metals Index fell (-4.3%) in March
2026, as global trade tensions remained volatile. West Texas Intermediate
(WTI) and Brent Crude rose MoM, by (51.3%) and (63.3%), respectively, as
markets remained cautious given tariff uncertainties and geopolitical
concerns.
The Dollar Index rose (+2.4%), through March 2026, with the US Dollar
(USD) depreciating vis-à-vis Emerging Market (EM) currencies (-3.0%) and
appreciating against the Indian Rupee (INR) on the spot market (+4.2%).
India 10Y G-Sec yields rose by 37.50 bps, while US 10Y G-Sec yields rose by
37.91 bps, and the German Bund yield rose by 36.10 bps, with rates settling
at 7.04%, 4.32% and 3.00%, respectively.
Domestic Macro & Markets
The BSE SENSEX fell (-11.5%) in March 2026, in line with the NSE NIFTY
Index. The BSE Mid-cap index & the BSE Small-Cap index Outperformed the
BSE SENSEX, falling by (-10.8%) & (-10.9%), over the month of March 2026,
respectively. Sector-wise, Power, Healthcare and Teck were the top
outperformers over the month of March 2026, clocking (-4.2%), (-4.9%)
and (-5.8%) respectively. All of BSE Sensex’s 13 major sectoral indices
ended the month of March 2026 in red.
Net Foreign Institutional Investors (FII) flows into equities were Negative
for March 2026 at (-$12.72 Bn), following (+$2.50 Bn) in February 2026.
Domestic Institutional Investors (DIIs) remained net buyers of Indian
equities for the 31st consecutive month with flows of (+$15.4 Bn) in March
2026 compared to (+$4.23 Bn) in February 2026.
India's high frequency data update:
Record levels of Goods and Services (GST) collections, stable retail inflation,
deflated input inflation, rising core sector outputs, and elevated credit
growth augurs well for the Indian economy.
Purchasing Managers’ Index Manufacturing PMI:
India’s Purchasing Managers’ Index Manufacturing (PMI) in March 2026 fell to
53.9 from 56.9 in February 2026, marking the weakest improvement in
business conditions in nearly four years, as factory output and new orders
rose at the slowest pace since mid-2022, weighed down by cost pressures,
intense competition, and heightened market uncertainty amid the Middle
East conflict.
Goods and Services Tax (GST) Collection:
Gross collections of INR 2.00 Tn (+8.8% YoY) in March 2026 concluded the
forty seventh consecutive month of collections over the INR 1.4 Tn mark.
The Gross Domestic Revenue stood at Rs 1.46 lakh crore, up 5.9%, while
Gross Import Revenue stood at Rs 0.54 lakh crore, marking a sharp rise of
17.8% during the month.
Core Sector Production:
The index of eight core sector industries grew (+2.3% YoY) in February
2026, against a 4.7% growth in January 2026. Five out of eight constituent
segments grew YoY, driven by Cement production (+9.3% YoY), Fertilizers
(+3.4% YoY), Steel (+7.2% YoY), Electricity Generation (+0.5% YoY) & Coal
(2.3% YoY).
Industrial Production:
Factory output growth as measured by the Index of Industrial Production
(IIP) grew YoY by (+5.2%) in February 2026, vs a growth of (+5.1%) YoY in
January 2026. Driven by positive growths in all the 3 major sectors- Mining
(+3.1% YoY), Manufacturing (+6.0% YoY) and Electricity (2.3% YoY).
Credit growth:
Scheduled Commercial Bank Credit growth by mid-March 2026 rose to
(+14.6%) YoY vs (+13.6%) YoY as of mid-February 2026. Agriculture and
allied activities credit in February 2026 grew by (+12.3%) YoY, while
industrial sector credit grew by (+13.5%) YoY, the services sector credit
grew by (+16.3%) YoY.
Inflation:
Feb’26 Consumer Price Index (CPI) inflation rate accelerated YoY to 3.21%,
up from 2.74% in Jan’26. Food inflation accelerated YoY to 3.47%, up from
(+2.13%) in the previous month of Jan’26. The Wholesale Price Index (WPI)
inflation rose sequentially in Feb’26, with the print at (+2.13%) YoY,
primarily due to increase in prices of other manufacturing, manufacture of
basic metals, non-food articles, food articles and textiles etc.
Trade Deficit:
Indian Merchandise Exports fell by (-0.81%) YoY to $36.61 Bn in February
2026. Imports rose by (+24.12%) YoY to $63.71 Bn. Merchandise trade
deficit rose to $27.71 Bn, growing 87.93% YoY.
Events to watch out for in April 2026
Trade Related News flow:
Finalisation of the Trade deal with the USA
during February 2026 seen as a good positive for the markets as it aims to
significantly reduce tariffs applied in early 2025. In addition to the FTA with
EU in January 2026. Finalisation of Indian bilateral agreement with Canada
& the Gulf Cooperation Council (GCC) to be watched closely.
Federal Open Market Committee (FOMC Meet):
The outcome of the
FOMC meeting held from March 17-18, 2026, was that the Federal Reserve
decided to keep the interest rate unchanged at 3.5% to 3.75% (the lowest
levels since early 2023) while signalling a potential rate cut later in 2026.
The Committee noted that economic activity has been expanding at a solid
pace, but job gains remain low and inflation is somewhat elevated. The Fed
will continue purchasing shorter-term Treasury securities to maintain
ample reserve balances. The next Federal Open Market Committee
(FOMC) meet is scheduled for 28-29th April 2026.
The Reserve Bank of India Monetary Policy Committee (RBI MPC)
Meet:
The RBI's Monetary Policy Committee (MPC) conducted its
monetary policy meeting from 4th to 6th February 2026. After a detailed
assessment of the evolving macro-economic conditions and the economic
outlook, the MPC voted unanimously to keep the policy repo rate
unchanged at 5.25%. The decision comes amid an improved growth
backdrop following higher government spending outlined in the Union
Budget, the announcement of an India–US trade deal, and progress on the
India–EU free trade agreement, allowing the central bank to stay on hold
while assessing evolving conditions. The next MPC meet scheduled for
6-8th Apr’26.
Other things to watch out for:
Organization of the Petroleum Exporting
Countries (OPEC+) has announced to increase production in April amidst
the geopolitical tensions in the middle east since Feb’26. Geopolitical
concerns with the US & Israel’s military action against Iran in late Feb’26, US
military action in Venezuela in Jan’26, Uncertainties in the Gaza strip &
Russia-Ukraine tensions still ongoing amidst other numerous conflicts.
Monthly Performance for Key Indices:
Source:NIMF Research, Bloomberg, RBI
Note: Market scenarios are not reliable indicators for current or future performance. The same should not be construed as investment advice or as any research report/research recommendation.
Past performance may or may not be sustained in future.
Note: Market scenarios are not reliable indicators for current or future performance. The same should not be construed as investment advice or as any research report/research recommendation.
Past performance may or may not be sustained in future.
Market View
Domestic equity markets declined as escalating U.S. – Iran tensions
heightened energy price risks and dampened the investor sentiment.
Crude oil prices surged as the Middle East conflict entered its fifth week
with no clear resolution in sight.
Markets fluctuated as investors remained cautious and adopted a
wait-and-watch approach amid escalating geopolitical tensions. However,
sentiment was partly supported by optimism over a potential end to
hostilities in the Middle East.
Reflecting the prevailing uncertainty the Indian Rupee witnessed sharp
depreciation versus US Dollar, complicating India’s external accounts,
growth prospects, and inflation expectations.
Indian Equity markets have witnessed sharp erosion from the previous
highs (seen in Sep 2024) and valuations appear reasonable post the sell off
across many sectors.
The duration of the current crisis is important determinant of how the
market behaves. The current elevated energy costs are critical for both
domestic and global growth and longer the crises continue, corporate
earnings may witness a sharp impact
Given geopolitical challenges and its implications, long term investments
may be invested systematically using the current corrective phase of the
market. Lack of visibility on impact of earnings due to Crude Oil, Supply
challenges, Currency depreciation are near term factors which can delay
recovery. Hence a systematic approach to adding allocations might help in
potentially lowering the anticipated volatility.
Asset allocation in line with the risk appetite of the investor is an
important tool to navigate any unanticipated volatility. Accordingly Large
Cap & Large Cap oriented diversified strategies along with hybrid funds
appear to be better placed on risk-reward basis, while Mid/Small cap
allocation may be considered in a staggered manner through systematic
investment with a long-term view.
Source:
NIMF Research,Bloomberg
Disclaimer:
The current fund philosophy may change in future depending on market conditions or fund manager’s views. The sectors mentioned
are not a recommendation to buy/sell in the said sectors. The scheme may or may not have future position in the said sectors. The
information herein above is meant only for general reading purposes and the views being expressed only constitute opinions and
therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been
prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The
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