# 1 Market
1.1 Indian equities snapped a two-week winning streak amid heightened volatility, with the Nifty 50 falling 2.2% to 23,643 and the Sensex declining 2.7% to 75,238, as escalating West Asia tensions, Brent crude above $109/bbl. and the Rupee hitting a record low of 96/USD weighed heavily on sentiment. Markets are expected to remain cautious and range-bound with a bearish bias, amid persistent macro risks and discomfort over Trump’s remarks following his China visit.
1.2 US equities ended a volatile week largely flat, with the S&P 500 up 0.1% while the Dow and Nasdaq edged lower, as early optimism from the US-China summit faded amid hotter producer inflation, Brent crude above $104/bbl. and 10-year Treasury yields rising to a one-year high of 4.57%.
1.3 The benchmark 10-year G-Sec yield rose by roughly 8 basis points to close at 7.06%, driven higher by imported inflation fears as Brent crude crossed $109/barrel and the rupee hit fresh record lows. The 10-year US Treasury yield surged 23 basis points to finish at a fresh 52-week high of 4.60%, triggering a massive global debt sell-off after hot producer inflation data (PPI up 1.4%) and escalating Middle East conflict prompted traders to price in potential rate hikes.
# 2 RBI
2.1 RBI last week relaxed norms for tie-ups between banks and non-bank entities for outward remittances, removing prior approval requirements for such partnerships.
- AD-1 banks will now be responsible for ensuring regulatory compliance by partner entities facilitating online cross-border remittances.
- Move aims to streamline non-trade outward remittances such as overseas education, medical treatment, travel, investments and family maintenance.
- RBI has mandated stronger transparency on forex rates, fees and charges disclosed to customers.
- India’s outward remittances under the Liberalised Remittance Scheme stood at $26.4 billion during Apr 2025–Feb 2026, down 2.3% YoY.
The RBI’s deregulation-driven approach is expected to accelerate digital cross-border remittances while improving customer transparency and deepening fintech-bank collaboration in recognition of the growing maturity of India’s fintech and cross-border payments ecosystem.
2.2 As per Crif Highmark report released last week,
- Around ₹15,800 crore of microfinance loans (~5% of sector portfolio) are linked to overleveraged borrowers with exposure to more than three lenders, highlighting elevated delinquency risks.
- Nearly 1.5 million borrowers have loans from four or more lenders, breaching the industry norm of limiting exposure to three microfinance lenders per borrower.
- These highly leveraged borrowers carry average outstanding loans exceeding ₹1 lakh each — more than double the average microfinance borrower exposure.
- About 10% of the ₹15,800 crore stressed pool is already overdue by 30–180 days, signalling rising asset-quality concerns in the sector.
- Borrowers with loans from exactly three lenders showed relatively better performance, with ₹49,374 crore outstanding and 5% overdue for 31–180 days.
- The strongest repayment behaviour came from 62.2 million customers with one or two loans, who account for ₹2.66 lakh crore outstanding and only 2.3% delinquency in the 30–180-day bucket.
The data underscores a sharp divergence in repayment quality between disciplined borrowers and heavily leveraged customers, reinforcing concerns around unsecured retail credit stress in microfinance.
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# 3 SEBI
3.1 SEBI on Friday released a consultation paper proposing [Green-channel for Accelerated Registration of Unique and Distinct Alternatives] GARUDA framework — a fast-track approval mechanism for “unique and distinct” Alternative Investment Fund (AIF) schemes aimed at reducing regulatory friction for fund launches.
- Under the proposal, eligible AIF schemes could receive registration approvals within 10 days versus the current 21–30-day timeline, subject to meeting predefined eligibility, disclosure and compliance criteria.
- SEBI also proposed simplified filing requirements and greater flexibility for AIFs to accelerate fundraising, capital deployment and subsequent scheme launches under existing fund platforms.
- The framework is designed to improve ease of doing business for India-domiciled PE/VC managers by reducing administrative delays, lowering launch-related execution risk and improving speed-to-market for new vintage funds.
- The move aligns with SEBI’s broader regulatory agenda of balancing investor protection with operational efficiency and deepening India’s private capital markets.
If implemented, GARUDA could materially streamline India’s AIF launch ecosystem, strengthening the domestic PE/VC fundraising environment and improving execution agility for fund managers.
3.2 SEBI on May 15, 2026, revised Borrowing Norms for Highly Leveraged InvITs
SEBI has now permitted use of fresh borrowings for Infrastructure Investment Trusts (InvITs) where Net Borrowings exceed 49% of the value of InvIT assets.
The Rationale:
Previously, when an InvIT’s net debt exceeded the 49% asset value threshold, leverage rules heavily restricted additional debt deployment, permitting it almost exclusively for direct acquisition or development of new projects.
Key Features:
Widens the regulatory bottleneck by explicitly expanding permitted end-use categories beyond 49% leverage to include the following:
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- Funding for asset capacity augmentation and performance enhancement on existing infrastructure holdings.
- Specifically permits road-sector InvITs to borrow for non-routine, heavy maintenance (e.g., periodic structural resurfacing, rehabilitation) mandated under concession agreements with authorities like NHAI.
- Allows raising new debt to replace existing liabilities, strictly capped at the principal amount outstanding. Accumulated interest, penalty fees, or prepayment charges cannot be funded via this fresh debt.
This provides significant operational liquidity and financial structuring flexibility to highly leveraged, mature InvITs. It ensures that critical national infrastructure assets do not face degradation due to capex restrictions, while the rigid principal-only refinancing rule prevents trusts from unsustainably compounding non-operational liabilities into their capital structures.
3.3 SEBI on May 15, 2026, revised operational and structural framework for SPVs.
When a foundational public-private partnership or concession agreement expires or terminates, the underlying SPV holding that project effectively loses its primary infrastructure operation. SEBI needed to bridge the regulatory vacuum regarding whether such entities still qualify as valid infrastructure SPVs under trust rules and mandate a firm wind-down or asset-replacement timeline. Key Features:
- Clarifies that an SPV will provisionally maintain its operational character as an “infrastructure SPV” even after its concession agreement finishes or terminates, subject to strict offboarding timelines.
- Mandates that the InvIT Investment Manager must execute one of two strategies within a strict one-year window:
- Complete a clean exit from the SPV via asset sale, corporate liquidation, formal winding up, or an upstream merger.
- Infuse and acquire an entirely new infrastructure project within the same SPV shell.
- The clock on the one-year grace period begins only after the later of: the official agreement termination date, the definitive settlement of pending arbitrations/litigations/tax assessments, or the conclusion of the contractual defect liability period.
Protects retail and institutional trust investors from legal and tax ambiguities tied to decaying corporate shells. It forces asset managers to proactively recycle capital or dissolve defunct structures without trapping capital in administrative limbo.
3.4 SEBI eased FPI onboarding norms by simplifying PAN allotment requirements after operational issues under the new Income-tax Rules, 2026.
- CBDT issued relaxations following SEBI’s engagement with authorities to address compliance hurdles faced by overseas investors.
- Authorised signatory in the common application form will now suffice for PAN purposes, without separate supporting documents.
- FPIs can use their own contact details if authorised signatory details are unavailable.
- Where PAN/Aadhaar/passport details of the authorised signatory are unavailable, FPIs may furnish their FPI registration number instead.
- Move aims to improve ease of onboarding for FPIs using the single common application form for SEBI registration, PAN, bank and demat accounts.
The relaxations signal SEBI’s continued push to reduce friction in FPI onboarding and improve ease of doing business for global investors in Indian markets. The move aims to use single common form for registration, PAN, bank and demat accounts.
3.5 SEBI plans to introduce a specialised distributor category for debt securities, modelled on the mutual fund distribution framework, to deepen retail participation in India’s bond market.
- Proposed distributors would help retail investors with KYC, documentation and transaction execution, simplifying access to bond investments and improving market penetration. (Nearly 54% of mutual fund industry assets are mobilised through distributor-led regular plans with MF distributors rising to 340000 over past 5 years).
- Debt mutual funds remain significantly smaller than equity funds, with AUM of ₹19.31 trillion versus ₹35.8 trillion, reflecting weaker retail preference amid unfavourable tax treatment.
- SEBI also warned against “AI washing”, where firms overstate artificial intelligence capabilities, while raising concerns around transparency, accountability and governance in AI-driven financial distribution.
SEBI’s proposed debt-distributor framework signals a strategic push to broaden retail participation in India’s bond market, while simultaneously tightening focus on investor suitability, transparency and responsible distribution practices amid rising product complexity.
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# 4 Economy
4.1 As per data released by Govt. last week,
- India’s total exports (goods + services) rose 13.6% YoY to $80.8 bn in April, despite geopolitical disruptions and shipping challenges.
- Goods exports climbed 14% YoY to a 49-month high of $43.6 bn, led by engineering goods (+8.8%), petroleum products (+34.7%) and electronics (+40%).
- Services exports increased to $37.2 bn from $32.9 bn last year, supporting external balances.
- Merchandise imports grew 10% YoY to $71.9 bn, driven by electronics (+38%), gold (+82%) and machinery (+13.9%), while crude imports declined 10%.
- Merchandise trade deficit widened to $28.4 bn in April from $20.7 bn in March, largely due to higher gold and net crude imports.
- Including services, overall trade deficit narrowed to $7.8 bn from $11.2 bn a year ago, aided by robust services exports.
India’s April trade data underscores resilient export momentum and strong services strength, though elevated gold imports and geopolitical disruptions could keep external balances under near-term pressure.
4.2 As per data released by Govt. last week
- India’s wholesale inflation (WPI) surged to a 42-month high of 8.3% YoY in April, up sharply from 3.9% in March, driven primarily by the West Asia conflict-led spike in crude oil, gas, metals and other commodities.
- Fuel & power inflation emerged as the biggest driver, jumping to 24.7% from 1.1% in March, with crude petroleum inflation soaring to 88.1%; petrol inflation rose 32.4% and diesel 25.2%.
- Core WPI (non-food manufactured products) rose to a 43-month high of 5%, signalling broadening input cost pressures across the economy.
- Manufactured products’ inflation increased to 4.6% from 3.4%, with 21 of 22 manufacturing categories seeing price increases.
- Primary articles inflation rose to 9.2% from 6.4%, while WPI food inflation edged up to 2.3%. Cereals and pulses remained soft, while vegetables rose marginally; onion and potato prices stayed in deflation.
- India’s CPI rose to 3.48% in April 2026 from 3.40% in March, driven by food inflation of 4.20% (up from 3.87%),
- The headline figure remains below the RBI’s 4% medium-term target, but rural inflation at 3.74% is outpacing urban inflation at 3.16%, reflecting agricultural supply pressures exacerbated by the West Asia crisis lifting energy and logistics costs.
The data highlights that supply-side shocks from global energy markets are now increasingly transmitting into factory-gate prices, raising risks of broader inflationary pressures across the economy.
4.2 Morgan Stanley raised its India FY27 GDP growth forecast to 6.7% from 6.2%, citing strong domestic demand resilience despite global geopolitical and commodity headwinds.
- The upgrade reflects confidence in India’s structural growth drivers, including sustained government-led infrastructure and defence spending, healthy urban consumption, improving private capex, and robust services exports.
- The brokerage expects India to grow 7.0% in FY28, reinforcing its position as the world’s fastest-growing major economy over the medium term.
- The outlook also draws support from easing inflation trends, improving manufacturing activity, resilient financial sector balance sheets, and continued policy focus on capital formation and supply-side reforms.
India’s growth resilience is increasingly being viewed as structurally driven rather than cyclical, positioning it as a relative outperformer amid slowing global growth and heightened geopolitical uncertainty.
4.3 Moody’s Ratings in its Global Outlook 2026 report released
- Cut 2027 growth forecast by 0.5 percentage points to 6.0%, reflecting risks from a prolonged and fragile US-Iran ceasefire.
- India seen as particularly vulnerable due to heavy dependence on imported crude oil and LNG; higher fuel and fertiliser costs could pressure fiscal balances and capex spending.
- Moody’s raised India’s inflation forecast to 4.5% for 2026 and 4.3% for 2027, warning sustained energy inflation could squeeze profits, weaken investments and strain public finances.
- Despite risks, India may see limited support from stronger agricultural export prices as a net grain producer.
Moody’s downgrade underscores how India’s growth resilience is increasingly being tested by external energy shocks and geopolitical volatility despite strong domestic structural fundamentals.Top of Form
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# 5 PE VC
5.1 Key take aways from the Bain-IVCA India VC Report 2026:
Overall Market
- India VC/growth investments reached ~$16B in 2025 (vs. $14B in 2024), second consecutive year of growth
- Overall, PE-VC market declined ~18% YoY; VC/growth bucked the trend at 1.2x
- 1,385 deals at avg ticket of ~$11.7M (vs. 1,270 deals, ~$10.8M in 2024)
Sector Breakdown
- Fintech: 2.2x YoY growth;
- Software/SaaS: 1.5x YoY; AI/gen AI-native deal volume grew 2.5x;
- Consumer Tech: ~0.8x vs. 2024 ~25% above 2023 levels; vertical Q-commerce funding ~20x to ~$150M
Fund-Raising
- Total raised: ~$5.4B (doubled vs. ~$2.7B in 2024); Average fund size up 35%+: ~$50M → ~$68M
- Domestic funds raised ~$4B; Maiden fund launches: 45 (up 3x from 15 in 2024)
Investor Landscape
- Leading VCs + PE/growth funds: ~40% of total investments (up from 35%)
- CVCs and family offices: ~22% of deal activity (highest since 2021)
Exits
- Total exit value: ~$7B (broadly flat vs. $6.8B in 2024)
- IPO exits: 28% of total (vs. 22% in 2024); $100M+ IPO share rose to ~90%
- Strategic sales: ~$1B+ (~15x vs. 2024);
- Secondary sales declined: ~0.8x of 2024 value
AI/Gen AI
- AI/gen AI-native funding: 1.5x YoY; deal count 33 → 87
- Application-layer deals surged (~6x in volume); vertical B2B strongest in BFSI and healthcare
- Foundational model funding remains limited due to high capital requirements
India’s VC ecosystem has decisively shifted from recovery to maturity — capital is disciplined, exits are real, and AI-led sectoral conviction is replacing broad based exuberance.