Market Medley

  Japan’s headline inflation rose to a 10-month high of 2.1% YoY in September 2026, breaching the Bank of Japan ’s (BoJ) 2% target due to imported inflation and a weak Yen. Crucially, core inflation surged to 2.4% YoY, indicating that underlying price pressures are broadening. Persistent wage growth and the expiration of energy subsidies threaten to trigger a wage-price spiral. Consequently, the BoJ is expected to advance its policy normalization with a 25 bps rate hike in 2026 and another in 2027.

Growing Dissent Within FOMC The Federal Open Market Committee (FOMC) maintained the policy rate unchanged at 3.50%-3.75% in a 9-3 vote, marking the first meeting under Chair Kevin Warsh with three dissents—the largest number of dissenting votes for any Fed chair so early in their tenure since 1970. While the decision to keep rates unchanged was largely on expected lines, the split vote reflects growing differences within the committee regarding the appropriate level of policy rates. Beth Hammack, Neel Kashkari, and Lorie Logan voted in favor of a 25bps rate hike, citing persistent inflationary pressures. The policy statement remained largely unchanged from June, continuing to emphasize that economic activity was expanding at a solid pace, productivity growth and capital investment remained strong, and job gains were in pace with labor force growth. It also noted that inflation remained elevated relative to the Federal Reserve's 2% objective, partly reflecting supply-side shocks, in...

   Key Policy Decisions Repo rate unchanged at 5.25% (unanimous vote) SDF rate: 5.00% MSF & Bank Rate: 5.50% Policy stance retained as “Neutral” – MPC retains flexibility to respond to evolving data 🔹 Inflation & Growth Projections (FY27) CPI inflation raised sharply by 50 bps to 5.1% (from 4.6%) Core inflation projected at 4.7% Upside risks from prolonged West Asia conflict, elevated energy prices (crude at $95/barrel assumed), and monsoon uncertainties Real GDP growth moderated to 6.6% (from 6.9%) Quarterly growth estimates also revised downward across all quarters 🔹 Separate Management of Inflation & Currency Unlike many Asian central banks, RBI did not hike rates to defend the rupee Instead, it announced a series of measures to boost dollar inflows while keeping the policy rate focused on inflation 🔹 Key Dollar Inflow Measures Concessional forex swap facility for PSUs raising ECBs (available till Sep 2026) FCNR(B) deposit scheme – RBI bears full hedgi...

  RBI eases the compliance burden on self-funded, non-customer-facing NBFCs by exempting those with assets below INR 1,000 crore from registration requirements, effective July 1, 2026.

  India's ambition to become a premier global financial centre is rapidly turning into reality with the evolution of the International Financial Services Centre (IFSC) at Gujarat International Finance Tec-City (GIFT City). Designed as India's gateway to global financial markets, the IFSC at GIFT City is fast becoming a preferred jurisdiction for international financial operations, blending global best practices with India's economic strengths .

The Reserve Bank of India has issued a new circular (RBI/2026-27/14, dated April 20, 2026), superseding its earlier directive of April 1, 2026. The previous communication stands withdrawn with immediate effect.

  Fund category Equity allocation Rewards Risks Selection Equity Savings 30–40% Moderate risk, defensive, smoother NAV; Lower equity component limits long‑term growth; not suitable when strategy is to increase equity exposure . Not Selected: Equity exposure is only ~30–40%, so it won’t meaningfully participate in equity upside

  Executive Summary:  The data clearly supports  moving from a ‘conservative’ to a ‘moderately aggressive’ stance . While the absolute bottom may not be in, the risk-reward ratio has turned favorably for long-term, disciplined investors. The combination of fair valuations, extreme pessimism (VIX), and robust structural flows (DIIs/SIPs) creates a classic "wall of worry" setup.

  As expected, the Reserve Bank of India (RBI) has retained its dovish stance on liquidity. By stating it “will continue to be proactive in liquidity management,” the central bank signaled a soft policy approach rather than a hard one. Currently, liquidity is so abundant that overnight rates are trading well below the repo rate. Interestingly, the RBI also expressed concern that commercial paper (CP) and certificate of deposit (CD) rates remain elevated, highlighting pockets of tightness even amid surplus liquidity.

  The Chairman of the Securities and Exchange Board of India (SEBI) – Mr. Tuhin Kanta Pandey, at the IVCA Conclave 2026 held last week, outlined SEBI’s evolving agenda for India’s Alternative Investment Fund (AIF) ecosystem. The address highlighted both the rapid growth of the AIF industry and SEBI’s approach to strengthening governance while facilitating ease of doing business.

  The Hon’ble Supreme Court in its ruling held that a long-standing tenant who enters into an agreement to sell with his landlord to purchase the very property he has been occupying cannot be made to pay stamp duty on that agreement as though it were a conveyance deed. The Court set aside the orders of both the Trial Court and the Hon’ble HC of AP, which had directed the tenant-buyer to pay stamp duty and penalty before the agreement could be admitted in evidence in a specific performance suit.

  The Union Cabinet chaired by Hon’ble PM Shri Narendra Modi has approved amendments to India’s Foreign Direct Investment (FDI) policy governing investments from countries sharing land borders with India (‘LBCs’). The changes modify the framework introduced through Press Note 3 (2020)*, which required government approval for foreign investments in India from LBCs.

  As you are aware, on 20 February 2026 the reciprocal tariffs announced by the US government on 02 April 2025, was struck down by the US Supreme Court, ruling that the IEEPA does not confer any authority to the Executive to impose tariffs.

  The recently announced trade understanding between India and the United States marks a significant macro-positive development for India, resolving a prolonged period of uncertainty that had clouded the investment landscape. While not a formal, comprehensive Free Trade Agreement (FTA), this arrangement addresses immediate tariff barriers and signals a recalibration of a critical economic relationship. Its implications span foreign investment, currency stability, corporate margins, and market sentiment, though it comes with inherent caveats characteristic of U.S. trade diplomacy.

  In a decision that underscores the Federal Reserve’s delicate balancing act, the Federal Open Market Committee (FOMC) voted yesterday to maintain the target range for the federal funds rate at   3.50%-3.75% . This pause follows an aggressive easing cycle that saw rates cut by 100 basis points in 2024 and a further 75 basis points in 2025. While the majority of the committee favored standing pat, the policy statement revealed a notable dissent, with   two members advocating for an immediate 25 basis point cut , highlighting the ongoing debate within the central bank.

  Here is a summary of the important changes introduced by the RBI's   Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 :

The unprecedented arrest of Venezuela's president has triggered immediate market turbulence.   Crude oil   spiked over 3% on supply disruption fears, as Venezuela is a major OPEC producer. This flight to safety also boosted   gold and silver , with gold nearing record highs as a geopolitical hedge. The  US Dollar Index  initially strengthened on safe-haven flows but faces later pressure from potential oil-induced inflation and global diplomatic strains. Debt markets  reacted sharply, with Venezuelan bond prices plummeting on default risks. Broader emerging market debt saw risk-off sentiment.  Global equity markets  turned volatile, with energy sector stocks gaining but broader indices dipping on growth uncertainty and higher input cost fears. Overall, the event injects significant geopolitical risk premium into commodities and volatility across asset classes

  The Reserve Bank of India’s December 2025 monetary policy review marks a significant pivot towards growth support, underscoring a delicate balancing act in a complex macroeconomic landscape. With a unanimous 25 basis points cut, the repo rate now stands at 5.25%, accompanied by a retention of the neutral policy stance. This decision, driven by exceptionally benign inflation—CPI projections for FY26 have been revised down to 2.0%—reflects the RBI’s commitment to fostering economic momentum even amid robust GDP growth of 8.2% in Q2FY26 and a volatile currency.

  Reserve Bank of India (RBI) has recently taken a progressive and pragmatic stance by increasingly permitting, on a case-by-case basis, the transfer of ownership of investment companies (including NBFCs and Core Investment Companies) to private family trusts.

  The Supreme Court, in a landmark judgment, has clarified several long-standing issues surrounding the pledge of dematerialized (“demat”) shares. Most importantly, it held that the invocation of a pledge under the Depositories Act and DP Regulations does not constitute an “actual sale” of shares.