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Market Outlook

Our Current Macro Reading

India Equities last month

Indian equities ended their two-month winning streak in August, with the Nifty50 declining 1.2% MoM to 24,080. In contrast, broader markets continued to outperform, with the Midcap and Smallcap indices gaining 2.1% and 3.1%, respectively. The divergence reflects resilient domestic liquidity and continued investor preference for domestic growth-oriented themes despite elevated global uncertainties.

West-Asia Conflict & Primary Market

Escalation in West Asia, including renewed US-Iran hostilities and attacks spreading across the Gulf region, has sharply increased geopolitical risk. Brent crude has risen to a three-month high and is now approaching $100/bbl. With the conflict threatening energy and shipping routes, market volatility is likely to remain elevated until there is greater clarity on a durable diplomatic resolution. The primary market remained robust, with over 12 mainboard IPOs in August collectively raising upwards of ?25,000 crore. Calendar year 2026 mainboard fundraising has now reached approximately ?88,000 crore. September is set to be significantly more active, with the NSE IPO tentatively scheduled for the 3rd week of Sept, while the Jio Platforms IPO is expected around Diwali.

Improving Domestic Macros

On the macro front, India’s economy continued to demonstrate resilience, with real GDP growing 7.8% YoY in 1QFY27, comfortably ahead of expectations, supported by manufacturing, investment and services. GST collections remained robust, rising 14.8% YoY to ?1.99 lakh crore in August, while the fiscal deficit stood at 26.8% of the FY27 target during April–July. India’s external position also remained comfortable, with forex reserves reaching a record $740.8bn by end-August.

Market Outlook

Looking ahead, we remain positive on the medium-term outlook, supported by strong domestic growth, improving corporate earnings and relatively comfortable valuations. However, near-term volatility is likely to remain elevated amid geopolitical risks, crude prices, currency movements and global monetary-policy uncertainty. We therefore favour a measured, bottom-up approach, focusing on sectors and companies with strong domestic demand, healthy balance sheets and sustainable earnings growth.

Portfolio Disclosure

Market Risks

Key equity market risks that can affect the model portfolio include changes in:

• Market volatility, General market conditions

• Trading volumes/liquidity and settlement periods

• Interest rates, Rate of inflation

• Domestic and/or global political, economic and financial developments

• Policies and/or legal and regulatory frameworks by government and other appropriate authorities

Portfolio Risks

Key portfolio level risks that can affect the model portfolio include changes in:

• High exposure to specific sectors or industries can increase volatility and risk if adverse conditions affect those sectors disproportionately.

• Individual stocks within the portfolio may experience price volatility due to company-specific events such as earnings results, management changes, regulatory actions, or competitive developments.

• Certain stocks in the model portfolio may have limited liquidity, which could affect the ability to enter or exit positions without materially impacting the market price.

• The portfolio construction relies on models and assumptions that may not accurately predict future market movements. Any errors or limitations in data, inputs, or modeling techniques could impact portfolio performance.

Determination of Benchmark index

• As the portfolio has a significant exposure to Large and Mid caps, the comparable index has been determined as Nifty 200.

• The model portfolio’s performance may differ from that of the benchmark index due to differences in holdings, timing, and weighting decisions.

Rebalancing and Implementation Risks

• Differences in execution timing, transaction costs, and client-specific constraints may cause actual returns to deviate from the model portfolio’s theoretical performance.

Past Performance Disclaimer

• Past performance should not be relied upon as a guarantee of future results. The returns shown are model portfolio returns and do not represent actual trading. • The returns shown are pre-expense but includes dividend. Actual results may differ due to transaction costs, timing, or other factors.

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