# 1 Markets
Indian equities fell a little over 0.5% on Friday, with the Sensex closing at 83,938.71 (−465.75) and the Nifty at 25,722.10 (−155.75), ending the week lower. Foreign portfolio investors were net buyers of $1.65 bn. in October after three months of outflows. Despite the day’s decline, both indices posted their strongest monthly gain since March—about 4.5%—and remain roughly 2% below record highs. The pullback was attributed to profit-taking, cautious signals from the U.S. Federal Reserve, and mixed cues on U.S.–India trade ties.
Overseas funds bought ₹12,206 crore of sovereign bonds via FAR in October, supported by a steady rupee, the US Fed’s rate cut, and improving prospects of a US–India trade deal.
RBI’s ₹11,000 crore auction cancellation eased yields; the 10-year fell 7 bps to 6.53% as FPIs stayed net buyers amid dovish global cues.
US equity markets ended October with robust gains, as S&P 500 rose 2.3% for the month, while Nasdaq jumped 4.7% monthly, and the Dow advanced 0.8% for the week. Strong earnings from technology majors, especially Amazon, fuelled optimism despite a cautious tone from the Federal Reserve. All three indices marked their sixth monthly rise, powered by AI and cloud-linked stocks, with year-to-date returns remaining impressive.
US bond yields rose last week, with the 10-year Treasury edging higher to about 4.1% after hawkish Fed comments signalled no guaranteed rate cut in December. The Federal Reserve’s policy stance and strong economic data kept fixed income markets volatile, while investment-grade and municipal bonds saw mixed performance.
# 2 RBI / Banking
2.1 The Finance Ministry last week has allowed municipal bonds to be used as eligible collateral in repo and reverse repo transactions.
- This inclusion recognizes municipal bonds under the SEBI framework as security in short-term lending markets, enabling banks, mutual funds, insurers, and corporates to participate in these instruments.
Impact:
- Opens a new asset class in the money market.
- Broadens investor base, enhancing demand and liquidity for municipal bonds.
- Facilitates easier fund-raising for urban local bodies to finance urban infrastructure.
- Spurs growth in India’s nascent municipal bond market, though credit quality and disclosure standards remain key challenges.
This move marks a structural step toward deepening India’s municipal debt market and integrating urban finance with mainstream capital market liquidity.
2.2 Key points from the 30th Meeting of the Standing Advisory Committee (SAC) to review the flow of credit to the MSME sector, held on October 27, 2025: chaired by Shri Swaminathan, Deputy Governor RBI.
Key Issues
- Persistent credit access hurdles for MSMEs due to information asymmetry, delayed payments, and limited collateral options.
- Low adoption of digital credit platforms and data-driven underwriting models.
- Financial literacy gaps and inconsistent capacity building among MSMEs.
- Continued vulnerability of viable but stressed MSME units amid geopolitical and demand uncertainties.
Proposed Solutions
- Accelerate digital credit enablement through the Unified Lending Interface, Account Aggregator network, and TReDS platforms for faster, transparent cash-flow-based lending.
- Strengthen credit assessment through alternative data models and analytics-driven risk evaluation.
- Institutionalize flexible rehabilitation frameworks for distressed yet viable MSMEs.
- Empower MSME associations to drive awareness, literacy, and information flow among enterprises.
- Introduce coordination frameworks for banks, credit guarantee institutions, and regulators to ensure empathetic credit delivery.
Digital credit integration and empathetic lending are emerging as the twin pillars to unlock inclusive, resilient MSME growth. The proposed solutions would result in broader and faster credit inclusion for MSMEs through reduced dependency on collateral.
2.3 As per S&P Global market intelligence report released last week
- Indian banks’ outlook is expected to improve in FY2026, with margin declines halting and profitability rising.
- ICICI Bank, HDFC Bank, and State Bank of India are seen as having potential upside in their share prices.
- Government reforms, such as simplified GST rules and tax cuts, along with anticipated RBI rate cuts, are supporting growth.
- However, external trade risks, including US trade tensions, pose challenges. Despite recent stagnation in returns due to geopolitical tensions, profitability is expected to rebound next fiscal year.
Indian banks are poised for improved profitability in FY2026, with margin declines stabilizing and government reforms supporting growth, despite ongoing external trade risks.
2.4 Madras High Court decision on Crypto
- Core issue: Whether an exchange can freeze a user’s unaffected crypto and whether cryptocurrencies qualify as “property” under Indian law.
- Decision: The Madras High Court held that cryptocurrencies are property—though intangible and not currency—because they can be owned, transferred, and held in trust. It ordered Zanmai Labs (WazirX) to secure ₹9.56 lakh via bank guarantee or escrow pending arbitration.
Investors gain property-law protections (injunctions, escrow, guarantees; stronger standing in insolvency), even as crypto remains in a regulatory grey zone—taxed as Virtual Digital Assets, brought under PMLA for compliance, yet still lacking a dedicated regulator—heightening the need for policy alignment. The RBI views even stablecoins as carrying risks, particularly the potential for currency substitution and loss of monetary sovereignty in emerging economies.
# 3 SEBI
3.1 SEBI proposed significant changes in MF regulations last week
- Redefines Total Expense Ratio (TER) to include base expense, brokerage & exchange fees, regulatory fees, and all other charges; excludes statutory levies (STT, GST, stamp duty) from the TER cap.
- Removes the additional +5 bps expense linked to exit load; raises base TER slabs by 5 bps for open-ended schemes to offset.
- Brokerage caps cut: Cash from 12 bps → 2 bps; Derivatives from 5 bps → 1 bps.
- Rationale: curb research/services bundled into commissions that investors already pay for via management fees.
- Allows AMCs to offer investment management/advisory for non-pooled mandates (large, non-retail) via a separately ring-fenced business unit with segregated key employees and board-level oversight to manage conflicts.
- Digital-first communications; no hard-copy ad submissions to SEBI; select newspaper notice requirements dropped. Half-yearly portfolio disclosures merged into monthly reports to avoid duplication.
What changes for stakeholders
- Investors
- Cleaner, more comparable TERs (non-controllable taxes shown outside TER).
- Lower trading leakages from sharp brokerage caps; potential better net performance especially in high-turnover strategies.
- AMCs
- Revenue/cost mix shift: removal of exit-load add-on offset by +5 bps in base slabs; net P&L impact depends on turnover (higher turnover funds benefit more from lower brokerage).
- New revenue lines from non-pooled mandates (UHNI/institutional) but must ring-fence staff/processes and enhance board oversight.
- Brokers/Dealers
- Compression of commission economics; unbundled research may need separate, explicit pricing; likely margin pressure.
SEBI’s proposed overhaul slashes brokerage caps, refines TER transparency, removes exit-load add-ons, and simplifies compliance, benefiting investors with lower costs and clearer fees, while AMCs adjust to revenue shifts and stricter governance for non-pooled mandates.
3.2 SEBI last week has proposed raising the threshold for High Value Debt Listed Entities (HVDLEs) from ₹1,000 crore to ₹5,000 crore to ease compliance burden.
- This change will cut the number of HVDLEs from 137 to 48, freeing about 64 entities from the higher compliance regime- quarterly filings, independent directors etc.
- Corporate governance norms for HVDLEs, mandatory since April 2025, currently align closely with equity-listed company standards.
- For NBFCs this ₹1,000 crore threshold is considered disproportionately low given their large private placement-based debt issuances.
The proposal thus balances governance standards with operational practicality, easing undue compliance costs for debt-heavy issuers.
3.3 SEBI last week is proposing new initiatives to boost Retail Participation in bond markets
- Permit companies to offer special incentives—higher coupon rates or issue price discounts—to specific investor groups: senior citizens, women, armed forces personnel (including ex-servicemen and widows), and retail investors.
- Require full upfront disclosure of incentives in offer documents and ensure they are:
- at the issuer’s discretion,
- applicable only to original allottees, and
- non-transferable after allotment.
- Align the framework with existing practices in OFS discounts for retail investors and higher FD rates in banks to ensure consistency and competitiveness.
Proposal is timely and needed to revive retail interest in corporate bond markets following a sharp drop in public debt issuances from ₹19,168 crore in FY24 to ₹8,149 crore in FY25.
SEBI’s proposal marks a pragmatic step to democratise the bond market by rewarding retail trust and reviving public debt participation.
3.4 SEBI last week has simplified transfer of MF units without a demat account.
- Permitted purposes: gifting to family/third parties, adding a new joint holder after a minor attains majority, and adding/reconstituting joint holders after the death of an existing holder.
- Post-transmission flexibility: once units are transmitted to a nominee, the nominee may transfer them to other legally entitled beneficiaries.
- Who can initiate: Resident and non-resident individual unitholders in Statement of Account (SoA) mode.
- Schemes covered: All mutual fund schemes across AMCs except ETFs, and Solution-oriented schemes with age criteria (e.g., children’s funds, retirement funds).
- Resident → NRI transfers not allowed
- Transferee prerequisites: Must be KYC-compliant and have a folio with the same AMC.
SEBI has simplified non-demat unit transfers via RTAs, enabling clean gifting, succession, and joint-holder changes while retaining KYC, consent, and scheme-specific safeguards.
3.5 Decision impacting M&A – Delhi ITAT decision– likely to give investment holding companies, family offices and corporate finance or treasury teams serious concerns
- Delhi ITAT held that a company opting for Section 115BAA’s 22% concessional corporate tax rate must also apply that rate to long-term capital gains and cannot use Section 112’s concessional rates.
- Section 115BAA offers an optional 22% rate subject to foregoing specified deductions and related loss set offs; election is irrevocable (but can be invalidated if conditions are breached).
- Taxpayer that had opted for 115BAA sought Section 112’s 20% rate on LTCG from land; Tribunal taxed the gain at 22% under 115BAA.
- Potentially adverse for investment holding companies, family offices, and corporates with sizable securities/immovable-property gains—especially given the 12.5% LTCG rate now available under Section 112 in certain cases; the spread versus 22% is material.
- The ruling arguably overlooks Section 115BAA’s text making it subject to other provisions of Chapter XII (which includes Section 112). On a structural reading, taxpayers may contend that Section 112 should continue to govern LTCG even where 115BAA is elected.
Though the above decision may be challenged on appeal, taxpayers under 115BAA with material LTCG exposure face uncertainty and should evaluate exposure, model scenarios, and consider protective positions.
# 4 Economy
4.1 Key Highlights – India’s Industrial Production (September 2025) release last week.
- Industrial production rose 4% year-on-year, marking the slowest pace in three months but higher than 3.1% in September 2024.
- Manufacturing (78% of IIP): expanded 4.8%, up from 3.8% in August and 3.9% a year ago.
- Mining: contracted 0.4%, reversing August’s strong 6.6% growth.
- Electricity: rose 3.1%, moderating from 4.1% in August.
- Capital goods: +4.7% (vs 4.5% in August)
- Consumer durables: +10.2% (sharp rebound from +3.5%)
- Consumer non-durables: –2.9% (vs –6.4%)
- Core Sector growth eased to a three-month low of 3%, reflecting a broader industrial slowdown.
- Half-Year Performance (Apr–Sep FY26): IIP up 3%, lower than 4.1% in H1 FY25.
Industrial output in September signalled a fragile recovery, with manufacturing gains offset by mining weakness and subdued consumer demand.
# 5 PE VC
5.1 As per report on India Tech deal landscape released by Grant Thorton last week,
Total Deal Activity
- 80 tech sector deals in Q3 2025, up 33% QoQ, signalling a strategic reset toward value-driven investments.
- Total disclosed value: USD 1.48 billion, reflecting a pivot from volume to high-value, theme-led transactions.
High-Value Transactions
- Deals exceeding USD 50 million quadrupled in number and rose over fivefold in value versus Q2 2025.
- The surge was concentrated in AI, SaaS, and enterprise automation segments.
Mergers & Acquisitions (M&A)
- Domestic M&A: Highest since Q1 2022; focus on AI, SaaS, tech services.
- 50 PE/VC deals, worth USD 584 million- Volumes up 39%, values up 172% QoQ
- Startup funding slowdown: USD 63 million across 22 deals, down 41% QoQ
Tech Services M&A Momentum
- Deal count tripled to 18, aggregate value USD 657 million
- Theme: shift toward cloud-native, automation-first and platform-driven capabilities.
India’s tech sector staged a decisive shift in Q3 2025, with value-led, AI-driven deals surging as investors pivoted from volume to strategic depth.
5.2 As per report by Your Story and Venture Intelligence released
- October has recorded highest level of PE VC investments recorded in a month over the past two years.
- Till date there were 958 deals aggregating $26.4 bn. vs. 1225 deals for $ 32.9 bn in 2024.
- In Oct 2025 alone there were 104 deals for $ 5.3 bn compared to $2.2 bn in Sept.2025.
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- Total venture capital (VC) funding in October 2025 reached $1.6 billion across 99 deals, marking the highest monthly level in the year so far.
- This is a 76% increase compared to October 2024 and a 36% rise over September 2025.
- October’s surge was driven by large value deals, with at least one $100+ million transaction each week.
- Late-stage funding category: $751 million raised from just five deals, showing large deal dominance.
- Quick commerce platforms led in VC fund inflows, notably due to Zepto.
- Fintech remains a leading segment in terms of deal volume and value.
- Artificial Intelligence (AI) startups have notably gained traction, rising higher in funding ranks compared to previous months.