# 1 Markets
Nifty 50 ended the week modestly higher, reclaiming and holding above the 26,000 mark after an early-week dip below this level. Sensex also finished the week with small gains, recovering from Monday’s sharp intraday slide of nearly 800 points as buyers returned on dips. The tone remained cautious but constructive, as the market digested the RBI’s recent 25 bps rate cut followed by Fed rate cut.
The 10-year G-sec yield rose roughly 10 bps over the week to around 6.6–6.62%, hitting its highest level in over three months despite the recent 25 bps RBI rate cut. The move was driven by FPI selling in FAR-eligible securities, cautious positioning ahead of fresh supply, rupee weakness and fading expectations of further near-term easing, partly offset by supportive RBI OMO announcements.
US equities ended the week little changed at the index level, with the Dow and S&P 500 briefly notching fresh record highs before a sharp tech-led selloff on Friday erased most gains. The Nasdaq underperformed on renewed concerns about AI and cloud earnings.
The Fed cut rates by 25 bps to 3.5–3.75%—the lowest since 2022—kept its 2026 path cautious with just one cut pencilled in. The US 10-year Treasury yield edged up only a few basis points over the week, oscillating around 4.15–4.20% as the curve steepened modestly with the 30-year moving towards 4.8–4.85%.
# 2 RBI/Banking
2.1 As per RBI data published last week,
- Bank lending to micro & small enterprises [MSE] rose sharply to Rs 9.54 lakh crore, up 20.45% since March 2025 and 27% y-o-y.
- MSEs now account for ~23% of total bank lending to industry, up from 20% in March 2025.
- Banks refocused on MSEs to protect margins and profitability amid falling interest rates and weaker corporate loan demand.
- Credit to large corporates touched a 7-month high of Rs 28.41 lakh crore in October, up 5.6% y-o-y and 2% m-o-m.
- Overall bank credit to industry rose 11% y-o-y, from Rs 37.74 lakh crore to Rs 41.93 lakh crore.
- Large corporates continue to rely more on bonds and IPO proceeds than bank loans, limiting a broad-based revival.
- Large corporates’ share of industry lending fell to 67.7% in October from 71% in March, while medium industries edged up to ~9.5%.
Banks’ deepening tilt towards MSEs is driving credit growth and margin stability, while the uptick in large corporate lending remains selective and short of a broad capex-led revival.
2.2 RBI last week revised its guideline proposed earlier which allowed only two banks holding at least 10% of banking system exposure to open current accounts for a corporate borrower to curb diversion of funds and improve credit discipline.
Revised guideline (announced now)
- No restriction on current/OD accounts if aggregate banking exposure < ₹10 crore.
- Banks can open current/OD accounts if they have: ≥10% share of total banking system exposure, or ≥10% share of fund-based exposure.
- If only one bank has exposure, one additional bank of borrower’s choice may open a current account with NOC from the lending bank.
- If no bank meets the 10% criterion, borrower may open a current account with any one bank, subject to NOCs from all lending banks.
Impact
- Restores flexibility and customer choice.
- Prevents transaction banking flows from concentrating with PSU banks.
- Reduces disruption to working-capital financing while retaining credit safeguards.
Overall, the RBI has struck a balance between credit discipline and operational flexibility, easing corporates’ transaction constraints while avoiding undue concentration of banking business.
2.3 As per credit bureau Crif High mark report released last week
- There is high concentration risk with just 6.3% of MSME borrowers (0.8 million) account for 51.5% of total outstanding loans out of total MSME credit at ₹ 43.3 lakh cr. (Sept 25).
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- MSME credit grew ~18% YoY, while active loans rose 5.7%, signalling higher ticket sizes and a maturing borrower base.
- There is multiple borrowing risk with borrowers with 6–10 and >10 loans form only 1.6% of borrowers but account for ~30% of total exposure.
- 4.7% of borrowers with 3–5 loans command 22% of the portfolio.
- 83.6% of borrowers have only one loan, up from 82.8% a year ago
- Portfolio at risk fell to 1.4% in Sept from 1.7% three months earlier: Portfolio quality strongest in medium enterprises.
- PSU banks lead the micro segment (36.3%); private banks dominate small and medium segments (~48%).
Overall, while MSME credit growth remains strong and asset quality has improved, the sharp concentration among a small set of highly leveraged borrowers poses a rising systemic risk for lenders.
# 3 Insurance
3.1 Union Cabinet has approved the Insurance Laws (Amendment) Bill, 2025 to be cleared by Parliament enabling 100% FDI in insurance from present 74% complimented by comprehensive structural reforms across the sector.
Key Takeaways
- 100% FDI permitted in insurance to attract long-term global capital; sector has so far received ~₹82,000 crore in FDI.
- Composite licences introduced, allowing a single insurer to offer both life and non-life products (capital requirement: ₹150 crore).
- Differential licensing regime for micro and niche insurers, with minimum capital as low as ₹50 crore (case-by-case), targeting low-income and rural markets.
- Captive insurers allowed, enabling large conglomerates to set up in-house insurers to manage group risks.
- Capital norms eased with Net-owned fund requirement for foreign insurers cut from ₹5,000 crore to ₹1,000 crore.
- Operational flexibility enhanced:
- Differential solvency margins
- Parity with banks on share-transfer approvals
- Removal of caps on commission payments
Impact
- Higher FDI limit and relaxed norms expected to significantly boost foreign and domestic investment.
- Life insurers can enter non-life and vice versa; large groups (ICICI, HDFC, SBI) can cross-sell and bundle products.
- Strong push toward tier-2/3 cities, rural and under-insured segments, supporting “Insurance for All by 2047”.
India’s insurance penetration remains low at 3.7% (FY24) vs global average of ~7%, underscoring reform urgency. Overall, the bill marks a transformative reset for India’s insurance sector—unlocking capital, competition and innovation to drive deeper penetration, stronger governance and long-term financial protection.
# 4 SEBI
4.1 SEBI, through its circular dated December 08, 2025, has prescribed operational modalities for migrating existing AIF schemes to: Accredited Investor (AI)-only schemes, or Large Value Funds (LVFs) for Accredited Investors.
Key Revisions
- New schemes or migrated schemes must clearly indicate their category: “AI only fund” or “LVF” in the scheme name (e.g., XYZ AI Only Fund).
- Existing eligible AIF schemes may migrate to AI-only or LVF status subject to Positive consent from all investors.
- Investors will continue to be treated as AIs for the entire life of the scheme, even if they cease to meet AI criteria later.
- Maximum permissible tenure extension for AI-only schemes and LVFs would be up to five years, inclusive of any extensions already granted.
- LVFs are exempt from standard placement memorandum (PPM) templates and mandatory annual audits, without requiring investor waivers.
Impact
- Provides greater regulatory flexibility for AIFs catering exclusively to sophisticated and accredited investors.
- Encourages growth of large-ticket, AI-focused AIF strategies while maintaining regulatory safeguards.
The regulatory intent is to enhance ease of doing business, while ensuring investor protection by allowing greater flexibility for sophisticated and accredited investors. But it lacks similar flexibility offered by IFSCA in Gift City for leverage and co investment offers to investors.
4.2 SEBI expanded the definition of “strategic investor” for REITs and InvITs to widen investor participation in public issues. This follows its earlier decision to reclassify REITs as equity-related instruments from Jan 1, 2026, to boost mutual fund and SIF participation.
- More institutions now eligible as strategic investors, including pension and provident funds, insurance funds, AIFs, family trusts, large intermediaries (net worth > ₹500 crore) and higher-layer NBFCs.
- Any Qualified Institutional Buyer (QIB) can now apply as a strategic investor under the amended rules.
- The move aims to ease capital raising and improve ease of doing business for REITs and InvITs.
Overall, Sebi’s move broadens long-term capital access for REITs and InvITs, improving fund-raising flexibility while deepening institutional participation in India’s listed real asset markets.
4.3 SEBI last week eased re-KYC norms for NRIs
- removed the need to be physically present in India for digital verification
- Relaxation applies only to re-KYC of existing clients; onboarding still requires India-based location
- Digital re-KYC must continue using safeguards like random prompts, time-stamping and geo-tagging
4.4 SEBI launches PaRRVA,(Past Risk and Return verification agency) a first-of-its-kind global framework to independently verify past risk and return claims of market intermediaries.
- Developed with NSE and CAREEdge Ratings, PaRRVA standardises validation of historical performance by SEBI-registered Investment Advisors and Research Analysts.
- Addresses misleading return claims, especially by unregistered entities, which distort investor decision-making
- Levels the playing field by allowing genuine, regulated intermediaries to showcase verified track records, earlier barred under existing rules.
- Global first, positioning India as a benchmark in transparency, accountability and ethical market practices.
PaRRVA marks a decisive shift towards transparent, verifiable performance disclosure, strengthening investor trust and market integrity while curbing misleading return claims. It is a timely intervention, as only 36% of investors have adequate market knowledge and over 60% rely on influencers or quick-gain narratives.
# 5 Economy
5.1 As per data released by Govt. last week
- Retail (CPI) inflation rose to 0.71% in November from a record-low 0.25% in October and 5.5% in Nov 2024.
- Uptick led by narrowing food deflation, seasonal food price rise, and fading favourable base effect; overall pressures remained muted due to GST cuts and softer food prices.
- Food prices fell for the sixth straight month, down 3.9% YoY in November (vs –5.0% in October).
- Rural inflation edged up to 0.1% ; urban inflation rose to 1.4% (from 0.9%).
Overall, the inflation trajectory remains benign, giving the RBI room to stay accommodative, with policy action hinging on growth signals and upcoming fiscal measures.
5.2 Key highlights from report released by CareEdge rating last week
- Merchandise exports are losing momentum amid US tariff shocks, while services exports remain the key stabiliser.
- Non-petroleum exports fell 3.9% in Sep–Oct FY26, reversing 7.3% growth in Apr–Aug, after front-loading faded.
- Services exports grew 8.2%, led by software (12.5%) and business services (22.4%).
- Higher H-1B fees and the proposed HIRE Act pose downside risks to services exports.
- 50% US reciprocal tariffs have hit India’s labour-intensive exports the hardest; Gems & jewellery –15.6%, textiles (ex-RMG) –9.5%; RMG exports also weak.
- Partial market diversification: Export losses to the US were partly offset by gains to UAE, Hong Kong, China, though durability is uncertain.
- Electronics and petroleum products stayed resilient, aided by US tariff exemptions.
- Imports rose 6.8% (Apr–Oct FY26); gold & silver imports jumped 30.5%, widening the trade deficit.
- Merchandise trade deficit hit USD 199 bn, among the widest in recent years.
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- Q2 FY26 CAD at USD 12.3 bn (1.3% of GDP), cushioned by remittances and services.
Overall, India’s external balance remains manageable despite export headwinds, with resilient services exports and benign oil prices offsetting tariff-hit merchandise trade pressures.
5.3 Asian Development Bank [ADB] in its report last week
- raises India FY26 GDP growth forecast to 7.2% from 6.5%, citing strong domestic consumption
- India FY27 growth kept unchanged at 6.5%.
- Upgrade follows India’s 8.2% Q2 FY26 growth and 8% expansion in H1
- Manufacturing and services grew ~9% each, showing broad-based momentum
- Resilient exports, moderating inflation and stable financial conditions support outlook
ADB upgrade aligns with RBI’s FY26 growth estimate of 7.3%
# 6 PE/VC
6.1 Key Findings from the Bain–Groww “How India Invests 2025” Report
- Mutual fund AUM projected to cross ₹300 lakh crore by 2035.
- Mutual fund penetration in Indian households expected to double from 10% to 20% over the next decade.
- Growth to be driven largely by mass and mass-affluent households beyond the top 30 cities; rise in participation from younger investors, women and non-metro households.
- Over-5-year mutual fund holdings in AUM rose from 7% to 16%; Over-5-year SIP holdings increased from 12% to 21%.
- Young investors (<30 years) now account for 40% of NSE-registered investors, up from 23% in FY19.; Gen Z comprises ~45% of the investor base.
- Monthly SIP inflows have grown at ~25% CAGR over the last decade.
- 55–60% of new SIP registrations now come from B30 cities.
- Women’s share in investor base increased to 25% in FY24 (from 20% in FY19).
- SME IPO proceeds have surged from ~₹1,800 crore in FY19 to ~₹6,000 crore in FY24.
- Reflects stronger liquidity and deeper domestic participation.
India’s investing ecosystem is undergoing a structural shift toward a broad-based, digitally driven, long-term retail participation model that will anchor deeper, more resilient capital markets over the next decade.
6.2 Key take aways from Ankur Capital’s 2025 India Deep Science Tech Report
- Core Thesis: India merges elite science, frugality, scale, and global mindset for deep tech dominance in AI Compute, Energy, TechBio, Space; 100k+ patents in 2024 (6th globally, 50% domestic); reverse brain drain; ₹1L Cr RDI Fund, BioE3 support.
- Investment Trends: Maturing funding with larger rounds; Energy/Space resilient; AI Compute 20% of 2025 funding (up from 2% ’23); $900M+ TechBio (80% therapeutics/diagnostics); mega-rounds like Raphe $100M; follow-ons lead Energy (+20% vs TechBio).
- Sector Funding (2025E, ₹M): AI Compute $ 311 mn; Energy $305 mn; Tech bio $152; Space $195 mn;
- Playbook: TRL progression (science to execution risk); global markets first; “commercial architects” for supply chains; India lean (pilot $2.3M vs global $20M); embed commercialization early.
India’s deep tech ecosystem is primed for global leadership, fuelled by maturing investments, policy tailwinds, and homegrown innovation across AI Compute, Energy, TechBio, and Space.