Indian Equity Market

Indian equity markets witnessed a correction during September, with all major market segments and sectors ending the month in negative territory.

The NIFTY 100 declined by 6.0%, while the NIFTY Midcap 150 TRI declined by 6.5% and the NIFTY Smallcap Index declined by 3.5%. Among the major sectors, the NIFTY IT Index was the biggest laggard, declining by more than 10% during the month.

Market Valuations

Following the recent correction, the relative valuations of large-cap stocks are more attractive compared with mid- and small-cap stocks.

Investors may consider using periods of market weakness to gradually deploy funds into equities through a staggered approach, while maintaining a long-term investment horizon.

Global Market Performance

Global markets delivered a mixed performance during September.

1-month returns in INR terms, as of 30 September 2026:

Debt Market Outlook

Global bond markets remained under pressure during September amid persistent inflation concerns, elevated crude oil prices and expectations that interest rates could remain higher for longer.

The ongoing conflict involving the US, Israel and Iran has kept crude oil prices elevated above $100 per barrel. At the same time, monetary tightening has intensified, with the US Federal Reserve and Bank of Japan raising interest rates by 25 basis points. These developments have contributed to a sharp rise in global bond yields, particularly in the US and France.

The situation has been further complicated by political uncertainty in Europe. France is facing an intense fiscal and budgetary debate over its deficit, while Germany has also witnessed increased political volatility following its state elections.

Together, these geopolitical, monetary and political developments continue to create a challenging environment for global financial markets.

The US 10-year Treasury yield was at 5.29% at the end of September, while the 30-year Treasury yield was at 5.64%.

In India, the 10-year Government Security (G-Sec) yield closed at around 7.19% at the end of September. Markets are currently expecting a 25-basis-point increase in the RBI policy rate during the October monetary policy review.

Bullion Market Update

Precious metals also witnessed a correction during September.

The MCX Gold Index declined by 4.84%, while the MCX Silver Index declined by 6.95% during the month.

Key Factors to Monitor

Q2 corporate earnings, crude oil prices, U.S. interest rates and bond yields, geopolitical developments, and foreign investor flows remain key monitorables for the markets.

Investment Strategy

We believe investors should remain focused on their long-term financial goals rather than short-term market movements.

The Indian economy continues to demonstrate healthy growth potential. However, global interest rates, crude oil prices, geopolitical developments and elevated valuations in certain market segments could result in periods of heightened volatility.

At this stage, we believe a balanced and diversified portfolio remains appropriate.

Investors should use market corrections judiciously and maintain a disciplined, diversified and staggered investment approach, rather than attempting to time short-term market movements.