Market Performance

Indian equities endured a choppy week, with the S&P BSE Sensex declining 468.42 points, or 0.60%, to settle at 77,540.83, while the Nifty 50 shed 114 points, or 0.47%, to close at 24,252 in the week ended Friday, 21 August 2026. The losses came even as broader markets showed relative resilience the BSE 150 Mid-Cap index edged up 0.04% to 17,282.07, and the BSE 250 Small-Cap index gained 0.36% to end at 7,242.51, suggesting that domestic investors continued to selectively accumulate in pockets away from large-cap names exposed to global risk factors.

The week's trajectory reflected an escalating tug-of-war between deteriorating global cues and periodic bouts of value buying at lower levels.

By Wednesday, the Nifty had fallen for seven consecutive sessions, shedding roughly 2.05% cumulatively, while the Sensex had declined about 1.49% over four straight sessions one of the more sustained selloffs of the year. Thursday's sharp reversal, which pushed the Nifty back above the psychologically important 24,200 mark, was driven largely by bargain hunting after the index touched multi-week lows, along with a degree of relief as the US Dollar Index softened. However, the recovery lost momentum by Friday, when the index oscillated in a narrow 24,225–24,270 band through the session before ending essentially flat — a sign that investors remain unwilling to build fresh directional positions until there is more clarity on crude oil prices and the Strait of Hormuz standoff.

With the June-quarter earnings season now largely behind the market, the coming weeks are likely to see investor attention pivot toward macro data, the domestic interest-rate trajectory, and global risk cues rather than company-specific triggers — a dynamic that typically makes markets more sensitive to headline geopolitical and commodity developments.

Domestic Economy

India's underlying growth engine showed signs of a mild but not alarming slowdown during the week. Provisional data released by the Ministry of Commerce and Industry showed the Index of Core Industries (ICI) expanded 5.4% year-on-year in July 2026, down from 6% growth in June. Even so, cumulative growth for the April-July period stood at a robust 4.3%, sharply higher than the 1.5% recorded in the same stretch a year earlier indicating that the underlying base of industrial activity remains firmer than the headline monthly deceleration suggests. Iron ore was the standout performer among the eight core sectors, posting 29.5% year-on-year growth in July, likely reflecting continued strength in construction and infrastructure-linked demand.

Separately, the HSBC Flash Composite PMI for August rose marginally to 54.6 from 54.3 in July, with stronger services activity offsetting a slowdown in manufacturing. While this marked the 61st consecutive month of expansion for India's private sector, it was also the second-weakest reading since March 2022, and new order growth remained subdued relative to recent years a signal worth watching, since sustained order softness can eventually translate into weaker output and hiring.

On the policy front, the Cabinet Committee on Economic Affairs approved five infrastructure projects worth a combined Rs 13,041 crore. This included four railway multitracking projects worth Rs 9,450 crore spanning West Bengal, Odisha, Tamil Nadu and Andhra Pradesh, expected to add roughly 410 km of rail network, improve connectivity to around 6,448 villages, and support an additional 76 million tonnes per annum of freight capacity. The Cabinet also cleared a Rs 3,590.73 crore four-laning upgrade of the Muzaffarpur-Sitamarhi-Sonbarsa stretch of NH-22 in Bihar, covering 82.578 km and strengthening connectivity toward the India-Nepal border. These approvals reinforce the government's continued emphasis on capital expenditure as a growth lever even as private consumption trends remain mixed.

India's foreign exchange reserves jumped $9.9 billion to $716.9 billion in the week ended 14 August, extending gains from $707 billion the previous week. The increase was driven by a $7.2 billion rise in foreign currency assets and a $2.7 billion rise in gold holdings, pushing reserves close to the record high of $728.5 billion touched in February. A rebuilding reserve cushion is a meaningful stabiliser at a time when the rupee is under pressure from elevated crude prices and FII outflows, since it strengthens the RBI's capacity to intervene in currency markets if volatility intensifies.

Separately, India's Portfolio Management Services (PMS) industry continued to expand, with assets under management rising 2% month-on-month to Rs 44.11 lakh crore in July, and the client base growing 1.3% to about 2.23 lakh accounts, according to data from the Association of Portfolio Managers in India (APMI). On a year-on-year basis, both AUM and client accounts grew around 11%, pointing to steady growth in high-ticket, professionally managed investment products even as broader retail sentiment has turned more cautious.

RBI, Credit Trends and Regulatory Commentary

A notable data point emerged from RBI Deputy Governor Shirish Chandra Murmu, who flagged a structural concern in India's credit ecosystem: the share of new businesses entering the formal credit system has fallen from 52% in FY23 to 42% in FY26, even as outstanding commercial credit grew 14% over the year. Murmu argued this isn't a data or technology shortfall lenders now have richer information and stronger analytics than ever but rather a sign that credit systems are getting better at serving already-included borrowers faster than they are expanding to reach new ones. This has implications for financial inclusion policy and for how banks and NBFCs calibrate underwriting models for first-time borrowers, particularly MSMEs.

On market regulation, SEBI chief Tuhin Kanta Pandey warned the regulator would act against attempts to manipulate or defame the newly introduced Closing Auction Session (CAS) mechanism, while SEBI separately directed brokers to allow investors to place orders during the five-minute transition window into the closing session. Several brokerages including Groww and Zerodha are expected to roll out CAS order-queuing features on their apps over the coming fortnight, with Angel One having already gone live with the feature. A related SEBI study found that traders who also participate in the cash market tend to record smaller losses in derivatives trading: 24% of futures-and-options traders had no cash-market activity in FY26, while 54% had cash-market turnover below Rs 1 lakh, and only about 8% recorded turnover above Rs 1 crore reinforcing the regulator's continued push toward investor-protection measures in the derivatives segment.

Global Developments

Global macro data released through the week painted a mixed picture, with pockets of resilience in Europe contrasting against clearer signs of slowdown in Asia.

United States: US inflation data showed consumer prices rose just 0.1% in July, while producer prices were flat, and retail sales unexpectedly declined. Together, this softer-than-expected data set has reduced market expectations of a near-term Federal Reserve rate hike, with the probability of a September hike falling to around 30% from roughly 50% a week earlier. However, minutes from the Fed's July meeting showed several policymakers remain open to further tightening should inflation stay elevated; the Fed has held its policy rate at 3.50%-3.75%. Adding a note of hawkish dissent, three Federal Open Market Committee members voted against holding rates steady in July — the loudest expression of hawkish sentiment within the committee in recent memory. Goldman Sachs Research's chief economist Jan Hatzius expects this dissent to prove short-lived, arguing that after two months of materially softer jobs and inflation prints, a September hike is now "very unlikely" and that current market pricing for the policy rate looks "too hawkish." Hatzius also forecasts a moderation in US consumer spending growth to 1%-1.5% in the second half of 2026, down from 1.8% in the first half, as the boost from spring tax refunds fades, while flagging that a renewed spike in gasoline prices — tied to the ongoing Strait of Hormuz disruption could disproportionately hurt lower- and middle-income consumers. Goldman Sachs continues to project 2.1% US GDP growth for 2026, supported by resilient business investment and lagged effects of earlier equity wealth gains.

United Kingdom: UK annual consumer price inflation accelerated to 2.9% in July from 2.6% in June, driven primarily by the sharpest jump in gas prices since October 2022. Services inflation rose 3.4% while goods inflation was more contained at 1.7%, with housing and household energy costs contributing the largest upward pressure and transport costs providing the main offsetting relief, according to the UK Office for National Statistics. A reacceleration in UK inflation complicates the Bank of England's policy path and could delay any near-term rate cuts.

Germany: In a bright spot for the euro area, Germany's manufacturing sector strengthened sharply in August, with the S&P Global Manufacturing PMI jumping to 54.1 from 52.2 in July — its strongest reading since May 2022 and ahead of market expectations. The seventh consecutive month of expansion was driven by faster growth in output, new orders and exports, pointing to a strengthening recovery in Europe's largest economy even as global trade conditions remain uneven.

China: China's economy showed clearer signs of losing momentum in July. Retail sales grew just 0.6% year-on-year, slowing from 1% growth in June, while urban fixed-asset investment fell 6.7% in the first seven months of the year compared with a 5.7% decline in the first half. Industrial output growth slowed to 4.5% from 5.3% in June, and the urban unemployment rate rose to 5.2% from 5%. The broad-based softening across consumption, investment and production suggests policy support measures rolled out earlier in the year have yet to durably stabilise demand, and adds to concerns about the health of the world's second-largest economy at a time when export-led growth is also facing headwinds from a stronger yuan and slowing global trade.

Japan : Japan's economy grew at an annualised 1.1% in the April-June quarter, a marked slowdown from 2.1% growth in the prior quarter and below market expectations, with quarter-on-quarter GDP growth of just 0.3%. Weaker household and business spending underscored the fragility of Japan's recovery. At the same time, core consumer inflation accelerated to 1.8% year-on-year in July from 1.6% in June the fastest pace since January driven by a weaker yen pushing up import and energy costs. With inflation still below the Bank of Japan's 2% target for a seventh straight month but trending higher, markets are increasingly pricing in the possibility that the BOJ could raise its policy rate from 1% to 1.25% in September, a combination of slowing growth and rising prices that puts the central bank in a difficult position.

Europe : Away from macro data, Goldman Sachs Research noted that inflows into European stocks hit a five-year high in the first half of 2026, coinciding with a strong earnings season. Earnings per share for STOXX Europe 600 companies rose an estimated 14% in the first two quarters, prompting Goldman strategist Sharon Bell to raise her full-year EPS growth forecast to 15% from 10%. The STOXX Europe 600 has returned 54% since January 2025 in dollar terms, comfortably outpacing the S&P 500's 34% gain over the same period a divergence Bell attributes to resilient corporate profitability even amid a renewed energy shock, though she cautions that sustained high energy prices could eventually weigh on demand and broaden the impact beyond energy-intensive sectors.

Commodities

Crude oil remained the dominant swing factor for global risk sentiment through the week. Brent crude climbed above $91 a barrel early in the week on renewed US-Iran tensions before extending gains toward $94 a barrel by Friday, putting it on track for a second consecutive weekly gain of around 6%. The unresolved conflict and continued disruption around the Strait of Hormuz a critical chokepoint for global oil shipments kept supply concerns elevated, with markets also pricing in the risk of further US economic pressure on Iran. For India, which imports the vast majority of its crude requirements, this has direct implications for the trade deficit, inflation trajectory and corporate input costs. Notably, India's crude import bill surged 57% to $63.4 billion in the April-July period from a year earlier, even though import volumes were largely unchanged at 81.9 million tonnes versus 81.5 million tonnes a year ago underscoring that the pain is being driven almost entirely by price rather than demand.

Gold extended its rally, rising 1.5% to around $4,587 an ounce and touching an over three-month high, putting it on track for a third consecutive weekly gain. The move was driven by a weaker US dollar and the US Treasury's surprise expansion of its long-duration bond buyback programme, while a technical breakout above the 200-day moving average appears to have triggered additional momentum-driven buying. Gold's continued strength, even as US yields remain elevated, reflects investors hedging against both geopolitical risk and longer-term fiscal and currency uncertainty.

Currency & Bond Markets

The rupee remained under pressure through the week, weighed down by the sharp rise in crude oil prices, continued FII outflows and broadly higher US Treasury yields a combination that typically increases India's import bill while simultaneously reducing the relative attractiveness of rupee-denominated assets for foreign investors.

In the US, the 10-year Treasury yield traded around 4.7%, while the 30-year yield rebounded to near 5.25%, largely reversing the brief relief rally that followed the Treasury's announcement of expanded long-duration bond buybacks. Treasury Secretary Scott Bessent signalled that buyback operations could exceed $4 billion each, alongside hints of an upcoming fiscal consolidation plan, but investors remain sceptical that these measures alone can sustainably lower borrowing costs. According to Goldman Sachs Global Banking & Markets, the Treasury's shift toward more active management of its issuance profile including potentially tilting future issuance toward shorter maturities could encourage greater investor allocation toward longer-dated securities, but a more durable decline in yields would likely require actual fiscal consolidation or further disinflation. Elevated term premium, reflecting compensation demanded by investors for holding long-dated debt amid heavy global bond supply, is expected to keep yields structurally higher unless one of these conditions is met.

Institutional Flows ( FII/DII )

Continued foreign institutional investor selling remained a persistent drag on Indian equities through the week, compounding the pressure from elevated crude prices and a firmer US yield environment. This trend was echoed in a Bank of America survey of global fund managers, which found that India has become Asia's least-preferred equity market a sentiment shift largely attributed to elevated US Treasury yields making Indian equities comparatively less attractive at current valuations. Foreign portfolio investors are likely to remain cautious in the near term as a result.

However, industry voices offered a more constructive longer-term read. Carnelian Capital founder Vikas Khemani argued that the foreign selling seen over the past two years reflects portfolio rebalancing rather than a structural rejection of India, and suggested the more important question is what happens once global capital eventually returns to a market that has, in the interim, been well supported by resilient domestic institutional inflows. Khemani views the current phase combining macro uncertainty with improving corporate fundamentals as a favourable window for accumulation. Separately, Crane Venture Partners signalled continued conviction in India's structural growth story at the private-market level, planning to deploy up to 80% of its $135 million Asia-Pacific fund into Indian AI, deeptech, semiconductor and robotics companies, betting that capital-efficient Indian startups can generate outsized returns without the scale of funding typical in Silicon Valley.

Corporate Earnings & Major Announcements

Stock-specific action remained active even as the broader earnings season wound down, with several companies posting Q1 FY27 results and making strategic announcements during the week.

The most striking large-cap development was Larsen & Toubro's "ultra-mega" offshore hydrocarbon order from the Middle East, valued above Rs 15,000 crore by the company's internal classification a reminder that West Asian energy capex remains a structural tailwind for India's engineering and construction majors even as the same region's geopolitical tensions weigh on oil-importing sectors elsewhere in the market. Welspun Corp's record $1.8 billion order from its US manufacturing base similarly points to steady demand for large-diameter pipes tied to North American energy infrastructure spending, taking the company's order book to an all-time high.

On the earnings side, the pattern across Cochin Shipyard and Zaggle healthy revenue growth alongside sharp profit declines points to margin pressure from rising input and operating costs rather than a demand problem, a theme likely to recur across sectors as elevated crude prices filter through corporate cost structures. Turtlemint's narrowing losses alongside strong revenue growth reflect improving unit economics in India's digital insurance distribution space. Meanwhile, Tata Motors' decision to raise vehicle prices from September is a direct pass-through of commodity cost inflation and is likely to be watched closely as a bellwether for pricing action across the broader auto sector heading into the festive season.

Sector & Industry Developments

Several sector-specific themes stood out during the week beyond headline index movement.

• Financial services : Aditya Birla Capital's entry into gold loans and ICICI Bank's $5 billion overseas fundraising plan both point to banks and NBFCs continuing to diversify funding sources and lending books even amid a cautious equity market backdrop.

• Quick commerce and gig economy : Companies in the quick-commerce space are heading into the festive season amid a tightening supply of delivery and frontline workers, with the broader frontline workforce market expected to face a 10-15% deficit at the festival peak, a pressure that is more acute in metro cities and could push up delivery costs or extend fulfilment times during the year's highest-demand period.

• Food delivery : Rapido's zero-commission platform Ownly is processing more than 50,000 orders a day in Bengaluru, having captured roughly 10% of the city's market within five months of launch a sign that the food-delivery space, often assumed to be a two-player duopoly, still has room for disruptive, commission-free business models to gain share.

• E-commerce : Flipkart is set to see the exit of two senior leaders Gunjan Bhartia (SVP, business finance) and Amer Hussain (VP, supply chain for Grocery and Minutes) at a time when the company's long-anticipated IPO remains on an uncertain timeline, adding to questions about execution continuity ahead of a public listing.

• Automobiles and EVs : Bain Capital is close to investing up to Rs 2,850 crore in JBM Auto's electric-vehicle business, part of a broader wave of private capital moving into India's EV ecosystem as the company scales its electric bus operations. Separately, Andhra Pradesh is building out a supplier ecosystem with around 38 parts vendors expected to set up nearby plants ahead of Royal Enfield's new Tirupati plant, expected to begin production by January 2029.

• Fintech funding : Indian fintech startups continued to attract meaningful private capital even as public markets remained under pressure, with Bachatt, NexEdge, TransBnk and Credit Wise each raising between $20 million and $35 million, backed by investors including Prosus, Lightspeed, Accel and InfoEdge.

• Telecom/satellite : Tata Group's Nelco is targeting early 2028 for commercial direct-to-device satellite connectivity in India and other South Asian markets, backed by a $20 million minority investment in Lunar Holdco Inc, the parent of the Elveo Mobile satellite connectivity brand.

• Consumer/jewellery : India's gold jewellery retailers are pursuing divergent growth strategies Kalyan Jewellers has launched a Tamil Nadu-focused regional sub-brand, while Joyalukkas, PNG Jewellers and Senco Gold are expanding beyond their home markets to build more national footprints, reflecting the sector's shift from purely regional trust-based retail toward broader brand-building.

• Aviation : The Air India pilot who tested positive for a psychoactive substance following an incident on a Phuket-Delhi flight, during which the aircraft briefly dropped 300 feet, will not face immediate termination under the airline's rules, which mandate dismissal only on a second violation; the pilot and co-pilot remain off roster pending a final investigation report.

• Regulatory/M&A : The Securities Appellate Tribunal dismissed an appeal by Danny Gaekwad against a SEBI order that had rejected his exemption request from timelines governing a competing open offer for Religare Enterprises, clearing a procedural hurdle in the Burman Group's ongoing takeover of the company.

Global Corporate & Markets Snapshot

• Samsung Electronics said shareholder returns could reach as much as 110 trillion won ($79.5 billion) in 2026 more than five times its previous record including 30 trillion won in third-quarter cash dividends, as the company faces pressure to share more of its AI-driven chip profits with investors following rival SK Hynix's large buyback announcement.

• US ETF inflows are expected to top $2 trillion in 2026, a 40% jump over 2025, according to Goldman Sachs Global Banking & Markets, driven by product innovation, rising liquidity and tax efficiency; actively managed ETFs, though just 13% of the $16.1 trillion US ETF market, now account for more than 35% of inflows.

• Goldman Sachs Equity Research head Jim Covello argued that cheaper, faster open-source AI models could ultimately benefit hyperscalers by making enterprise AI adoption more commercially viable, even as investors grow more skeptical of unchecked capital expenditure by major cloud providers.

Outlook for the Coming Week - What to Watch

With the earnings season largely concluded, near-term direction for Indian equities is likely to be dictated more by global macro and geopolitical developments than by company-specific news flow. Key factors investors should track include :

• Crude oil and the US-Iran standoff: Any further escalation around the Strait of Hormuz, or conversely a de-escalation that eases Brent prices from the $91-94/barrel range, will remain the single biggest swing factor for Indian equities, the rupee and inflation expectations.

• US Federal Reserve signals: With September rate-hike odds down to around 30%, incoming US inflation, jobs and retail sales data will be closely watched for confirmation of the Fed's likely extended pause; any hawkish surprise from FOMC members could reintroduce volatility in global bond and equity markets.

• US Treasury bond buybacks and yields: Continued moves in the 10-year (around 4.7%) and 30-year (around 5.25%) Treasury yields, along with further clarity on the size and pace of Treasury buyback operations, will influence global risk appetite and FII flows into emerging markets, including India.

• Bank of Japan policy meeting ( September ) : Markets are increasingly pricing in a possible BOJ rate hike to 1.25% from 1% following the recent uptick in core inflation, a move that could affect global carry trades and yen-funded positions.

• FII/DII flow trends : Continued foreign selling, set against the backdrop of India being flagged as Asia's least-preferred market in the BofA fund manager survey, will remain a key sentiment driver; sustained domestic institutional buying will be critical to cushioning any further foreign outflows.

• Rupee and forex reserves : Movement in reserves (currently at $716.9 billion, near the record $728.5 billion) and the rupee's trajectory against the dollar will be watched as indicators of external sector resilience amid the elevated oil import bill.

• Corporate actions : Follow-through on ICICI Bank's $5 billion overseas fundraising, Aditya Infotech's Rs 1,500 crore equity raise, and the Colgate-Palmolive leadership transition effective 28 September.

• Sectoral triggers : Auto price hikes (Tata Motors effective 1 September) as a read on festive season pricing power; quick-commerce labour supply constraints heading into the festive season; and continued EV and fintech private funding activity as gauges of risk appetite in unlisted markets.

• Technical levels : For Nifty 50 options expiring 25 August, maximum Call open interest is concentrated at 24,300 and 24,500, suggesting resistance in the 24,300-24,400 zone, while maximum Put open interest at 24,000 and 24,200 points to support around 24,000-24,100 — levels likely to guide short-term trading ranges in the absence of a fresh directional trigger.