# 1 Markets
Indian equities posted mild weekly gains despite IT weakness and elevated volatility, supported by defensive buying. Nifty 50 rose 0.39% to 25,571 and Sensex gained 0.38% to 82,814. Sentiment received a boost after a Feb 20 ruling by the US Supreme Court striking down key Trump-era tariffs, easing pressure on Indian exports; Gift Nifty jumped ~400 points. While a short-term relief rally is expected across financials, industrials, and exporters, upside may be capped by a fresh 15% global tariff, ongoing India–US trade terms, Fed uncertainty, and IT sector headwinds.
Indian bond market saw rising yields last week with 10-year G-Sec climbing to a 1-week high of 6.73% by Feb 20 amid heavy supply and tight liquidity. RBI bond buys and debt switches provided some support; longer 10-20Y segment held firmer demand.
US equity markets ended last week higher, despite early choppiness from AI/tech selling, boosted by Friday’s Supreme Court ruling striking down Trump tariffs. S&P 500 +1.08%, Nasdaq +1.51%, Dow +0.25%; relief rally lifted Alphabet (+3.7%), Amazon (+2.6%), with tariff-hit firms gaining amid refund hopes.
US Treasuries rallied over the week, with the 10-year yield falling to a mid-week low of 4.04% before settling at 4.08% on Feb 19—around 10 bps lower on the week. The rally was supported by safe-haven demand following a Supreme Court tariff ruling, even as equity markets advanced, while stronger economic data limited the extent of the yield decline.
# 2 RBI/Banking
2.1 RBI tightened Credit Norms for Capital Market Intermediaries: – Key features/impact
- Banks must provide credit to SEBI-regulated stockbrokers and similar intermediaries only on a fully secured basis, meaning 100% collateral coverage is required and partial unsecured or promoter-only guarantees will no longer suffice.
- Earlier flexibility is gone – For every ₹100 credit exposure, the bank must hold ₹100 in eligible, tangible collateral.
- This comes on top of the Centre’s upcoming hike in securities transaction tax (STT)—2.5x on futures and 1.5x on options—raising trading costs.
- Bank guarantees issued in favour of exchanges or clearing houses must be backed by at least 50% collateral, of which 25% must be in cash, and equity shares accepted as collateral will attract a minimum 40% haircut.
- Currently, brokers use bank guarantees (BGs) without locking up large chunks of brokers’ capital. A modest collateral could support a large BG, providing disproportionate leverage to brokerages. This makes it costlier for brokers to obtain trading limits.
- The RBI has also curbed banks’ ability to fund intraday margin requirements. Earlier, brokers could rely on short-term bank lines to bridge temporary margin blocks, particularly for large institutional trades. From April, such funding is permitted only for settlement mismatches, not trading margins, pushing brokers to hold larger cash buffers
- Brokers are likely to rely more on CPs, NCDs, bonds and NBFCs, weighing on sector profitability during transition. Bank-owned brokers are relatively insulated
- Loans against listed shares and convertible debt are capped at 60% LTV; against mutual funds, ETFs, REITs, and InvITs at 75% LTV; against debt mutual funds at 85% LTV. Loans against eligible securities are limited to ₹1 crore per individual borrower.
The rules are squarely aimed at curbing speculative activity and reducing systemic risk from excessive broker leverage. As the new norms could impact 10–12% of options turnover, translating to nearly a 10% hit to BSE’s earnings, shares of BSE, Angel One, and Groww plummeted up to 10%.
2.2 RBI has issued draft norms to curb mis selling, bundling and “dark patterns” in bank distribution of third-party products, especially insurance.
- Proposed norms restrict bundling, tighten suitability checks and refunds, and push a shift from sales-led to advice-led distribution.
- EY India expects a moderate hit to fee income and higher costs for 12–24 months, stabilizing as banks retrain staff and recalibrate processes.
- Bancassurance is a ₹22,000–25,000 crore annual fee pool for banks (per Icra); tighter rules are likely to dent near-term earnings and raise compliance costs. Bank channels account for ~50% of insurance premiums on average (up to 80% for some insurers), led by savings products (endowment, ULIPs), credit protection and retail health.
- In FY25, SBI earned ₹2,766.8 crore and HDFC Bank ₹6,308 crore from insurance commissions—highlighting material exposure
Expect a temporary earnings and cost headwind for banks, operational recalibration across bancassurance, and structural nudges toward cleaner, need-based selling rather than a lasting industry setback.
2.3 RBI liberalises ECB rules to revive overseas fundraising after FY26 slowdown.
- Borrowing limits raised up to $1 bn or 300% of net worth (vs $750 mn earlier).
- More borrowers/lenders allowed; even firms under restructuring/investigation included.
- Interest rate caps removed; market-determined rates benefit mid-sized firms.
- ECBs allowed for land purchase, acquisitions, control buyouts, and on-lending (except real estate on-lending) – Big boost to M&A, with real estate among key beneficiaries.
- Lower forward rates + RBI forex swaps reduce hedging costs; ECB momentum picking up.
Better access to foreign capital; more issuers expected via GIFT City for cost and tax advantages.
2.4 RBI listens to market and reverses its 2025 stance:
- NBFCs can again factor default loss guarantees (DLGs) into loan-loss provisioning if the guarantee is embedded in the loan structure.
- Earlier rules had forced full provisioning on fintech-originated loans, sharply raising credit costs.
- Lower provisioning needs improve NBFC profitability and release capital for fresh credit growth.
- Loss estimates must be recalibrated every time a DLG is invoked, as the guaranteed cover diminishes with use.
- Rating agencies see scope for reversal of excess provisions and stronger credit expansion.
A timely regulatory reset that restores risk-sharing logic, revives fintech partnerships, and supports faster, cleaner credit growth.
2.5 Overhaul of Internal Ombudsman Framework for Banks
- RBI overhauled the framework governing Internal Ombudsmen (IOs) in banks. Under the revised norms, banks can no longer close complaints proposed for rejection without a mandatory review by the Internal Ombudsman, effectively curbing arbitrary grievance disposal.
- RBI also announced the establishment of a Centralised Receipt and Processing Centre (CRPC) to conduct preliminary scrutiny of complaints under the Integrated Ombudsman Scheme, effective July 1, 2026. All complaints — online, email or post — will be processed centrally to assess admissibility before further action.
Strengthens customer protection and first-level complaint resolution; aims to reduce escalation to RBI’s external Ombudsman scheme. CRPC streamlines the ombudsman intake process and improves efficiency in grievance redressal.
2.6 RBI Bulletin – State of Economy- February 2026: Key Takeaways
- Indian economy remains resilient; listed private companies showing stronger aggregate sales growth Industrial activity strong; services sector sustaining healthy growth
- Rupee and foreign portfolio investments rebounding on positive trade sentiment (India-EU FTA + interim India-US trade deal)
- Headline inflation benign under the revised CPI series
- Volatility has reduced under the Flexible Inflation Targeting (FIT) framework vs. pre-FIT era
- Post-2021-22, price shocks are no longer broadly propagating across the basket — inflation expectations appear anchored
- Government’s targeted supply-side interventions since 2021 have been effective in containing price spikes
India’s macroeconomic fundamentals remain on a steady footing — fiscal consolidation is on track, inflation is increasingly anchored, and the economy is navigating global uncertainty with resilience and policy discipline
# 3 SEBI
3.1 India Corporate Bond Market – FY26 (Apr–Dec 2025)
- Funds raised via corporate bonds fell 6% YoY to ₹6.76 trillion (9M FY26) vs. ₹7.18 trillion a year ago, despite 1,458 issuers vs. 1,219 a year before.
- RBI easing not transmitted: 125 bps repo rate cut (to 5.25%) + 100 bps CRR cut (to 3%) barely moved corporate yields; 10-yr NABARD bonds sat at 7.24–7.26%, up 20–25 bps since April
- State government bond yields rose on fiscal deficit fears, spilling into corporate spreads and choking Q2 issuances
- Weighted avg. bank lending rate fell 47 bps to 9.21% (Nov); 3-yr corporate bond yields are 15–20 bps higher since the policy cut — borrowers decisively shifted to bank loans
- Long/ultra-long tenor bonds under pressure from heavy central and state government supply keeping yields elevated.
- Bond yields also hardened after August, following 50% US tariffs imposed by Donald Trump and continued rupee depreciation, dampening corporate borrowing appetite
Despite RBI’s most aggressive easing in years, stubbornly high bond yields, global trade shocks, and cheaper bank loans conspired to make FY26 a lost year for India’s corporate bond market.
3.2 SEBI Proposes ETF Pricing Reforms
- ETF price bands currently use T-2 NAV, creating a one-day lag that misaligns prices during volatility
- Key fix: Shift base price calculation from T-2 to T-1 data (three options proposed: closing market price, avg iNAV, or closing NAV — all from T-1)
- Current 20% daily band may be too wide; data shows 99.8%+ of equity/debt ETFs move within 10% daily
- Sebi proposes removing the 20% cap to align with derivative contract limits + a dedicated pre-open session
- Mutual funds prefer T-1 closing NAV (“waterfall” approach); flag iNAV as unreliable; call for standardised calculation methodology- Minimal on normal days, but significantly better price accuracy during volatile periods
Impact
- Tighter price bands and cooling-off periods could cause ETFs to hit limits and pause trading more often during volatile moves.
- If the underlying commodity keeps moving while ETF trading is paused, prices can temporarily diverge from NAV.
- Large institutions that can transact off exchange may exploit these price gaps, while small retail traders remain stuck waiting on the exchange.
- Measures meant to protect small investors may actually disadvantage them by restricting their ability to react, while increasing arbitrage opportunities for big players.
While Sebi’s proposed reforms on ref. price to real time alignment a long-overdue and improves accuracy, tighter bands may unintentionally shift the advantage toward large institutions, limiting flexibility for small traders during volatile periods.
3.2 SME IPO Tightening — ₹1 Crore EBITDA Requirement
- SEBI now requires SMEs to show ₹1 crore EBITDA in two of the last three years before listing, strengthening IPO quality criteria.
Raises the bar for SME listings, reducing the risk of weaker companies entering public markets; improves investor protection.
# 4 Economy
4.1Trump tariff reversal
- In a 6–3 ruling, the US Supreme Court on Friday struck down Donald Trump’s sweeping IEEPA-based tariffs, holding that the President lacks authority to impose tariffs without clear congressional mandate. IEEPA permits sanctions, not open-ended tariffs.
- The decision invalidates Trump’s “reciprocal” tariffs, slashing the effective US tariff rate (~17% → ~9%) and triggering potential refund claims up to ~$175bn.
- For India, ~55% of exports gain immediate relief as IEEPA duties fall away, while steel/aluminium and select auto tariffs persist other tariff regimes (Sections 232/301) remain intact.
- Trump responded by imposing a narrower, time-bound 10% global tariff under Section 122. This was further increased to 15% on Saturday. There was also a statement that tariffs on India as agreed at 18% will stay. Uncertainty continues to baffle exporters.
Strategically, though in principle, the ruling restores legislative primacy, constrains executive trade powers, and creates near-term relief—but sustained uncertainty—for partners like India.
4.2 As per S&P HSBC India PMI release last week
- HSBC Flash Composite PMI rose to 59.3 in Feb (from 58.4)—the fastest expansion in three months and well above the 50-growth threshold (S&P Global / HSBC).
- Manufacturing PMI hit a 4-month high of 57.5, driven by strong domestic orders and sales.
- Services activity stayed broadly stable, with domestic growth moderating to a 13-month low, offset by stronger export orders.
- New orders rose at the fastest pace since Nov, supported by resilient demand, tourism, and marketing initiatives.
- Manufacturing export growth slowed to a 16-month low, while services exports accelerated to the strongest since Aug 2025.
- Firms expect investments and marketing to sustain growth, despite rising inflationary pressures.
February data signal a manufacturing-led acceleration in India’s growth, with demand and hiring firming up even as services stay resilient and export momentum diverges across sectors.
4.3 As per Govt. data release last week
- Core sector growth eased to 4.0% in Jan (from 4.7% in Dec), well below 5.1% in Jan last year; cumulative growth Apr–Jan FY26 at 2.8% vs 4.5% YoY.
- 7 of 8 sectors saw weaker YoY growth: slowdown driven largely by energy-related sectors.
- Crude oil –5.8% YoY, natural gas –5.0%, refinery output flat (though better than Dec’s –1%).
- Softer power demand led electricity growth to slow to 3.8% (from 6.3%).
- Cement +10.7% YoY, steel +9.9%—slower than December but still robust, reflecting infrastructure spending and stable housing activity.
- Coal +3.1%, fertilisers +3.7%, both marginally lower than December.
- The eight core industries account for 40.27% of IIP, so moderation signals softer industrial momentum.
January’s core-sector slowdown reflects an energy-led drag, while sustained strength in steel and cement underscores resilient infrastructure and housing-led investment momentum.
4.4 As per data release by Govt. last week
- Merchandise trade deficit widened to a 3-month high of $34.68 bn in January (Dec: $25 bn; Jan last year: $23.43 bn).
- Imports: Jumped 19% YoY to $71.24 bn, the second-highest monthly print after $76.1 bn in Oct 2025.
- ~83% of the deficit expansion attributed to higher gold imports (per ICRA).
- Exports: Rose a modest 0.6% YoY to $36.56 bn; sequentially down 5.08% from $38.51 bn in December.
- 16 of 30 key sectors declined, including labour-intensive leather, textiles, and apparel.
- Exports to the US: Fell 21.7% YoY to $6.59 bn in January amid earlier 50% tariffs (now reduced to 18%).
- Non-petroleum, non-gems & jewellery exports: Down 0.24% YoY to $32.78 bn.
- Services exports: Expected record $43.9 bn in January, +26.3% YoY.
- Cumulative performance (Apr–Jan):
- Total exports (goods + services): Up 6.15% YoY to $720.76 bn.
January’s wider deficit was import-led (gold-heavy), while services exports cushioned weak goods performance amid US tariff headwinds and early signs of market diversification.
# 5 PE/VC
5.1 Brief highlights from the report “The Ascent of Alternatives” during The CRISIL Investment Conclave 2026 last week – India’s booming alternatives market, driven by macroeconomic strength and financialisaton of savings.
- Managed fund AUM hit ₹212 lakh crore (64% of GDP) in March 2025, doubling from 2020, and is projected to reach ₹455 lakh crore (73% of GDP) by 2030.
- AIF commitments grew at 30% CAGR to ₹15.74 lakh crore by Dec 2025, with 1,738 registered funds outperforming public benchmarks (e.g., early-stage equity IRR 22% vs Sensex TRI 13.7%).
- Combined AUM under InvITs/REITs tripled to ₹7.8 lakh crore; returns strong (e.g., warehousing InvITs 22% XIRR), but penetration low (<10% in most sectors).
- Household financial savings tilting to market-linked products (MF/equity share up from 4% to 15% of flows); managed funds now 106% of time deposits.
- Domestic investors added ₹1.14 lakh crore to AIFs (Mar 2024-Dec 2025), nearly double foreign; AIFs now 16.4% of private market deals.
- EPFO/NPS have nil AIF exposure due to liquidity/valuation issues; solutions include product redesign, secondary markets, and standardised disclosures.
- Product innovations like SIFs/SM REITs, robust IPO exits (320 in FY25), and govt funds (e.g., ₹10,000 Cr SME fund in Budget 2026-27). were key enablers.
India’s alternatives market is poised for explosive growth, with AIFs and InvITs/REITs leading the charge amid rising domestic capital and untapped institutional potential.
5.2 India AI Impact Summit 2026 – Key take aways
- As per Govt. release, The India AI Impact Summit 2026 held last week in Delhi, has attracted investment commitments of over $250 billion related to infrastructure with participation of over 5 lakh visitors including global tech players, investors and startups.
- Investment commitments are largely linked to infrastructure required to power India’s AI eco system including data centres, semiconductor facilities, high performance computing capacity and digital connectivity.
- India repositioned the global AI narrative from safety-centric debates toward development-led AI, positioning itself as a leader for Global South priorities such as healthcare, agriculture, and language inclusion.
- Sovereign and multilingual artificial intelligence emerged as a strategic priority, with expansion of national compute capacity and launches of indigenous large language models aimed at addressing India’s linguistic diversity and reducing dependence on Western models.
- Sectoral deployments demonstrated early real-world impact, particularly in agriculture, healthcare, and education, reinforcing artificial intelligence as a productivity lever rather than a purely experimental technology.
- India framed Digital Public Infrastructure as an exportable global template, advocating shared access to artificial intelligence infrastructure and “AI commons” for developing nations.
- Employment and workforce transition remained central, with emphasis on reskilling and inclusive growth given India’s large informal and young labour base.
The summit gave India a compelling global script for AI leadership, but the real test lies not in the eloquence of the declaration but in the hard work of regulation, implementation, and equitable access that follows.
5.3 As per EY report on Private Credit last week
- India’s private credit market hit an all-time high of $12.4 billion in 2025, growing 35% YoY/
- 35%+ of H2 capital went into refinancing, acquisition financing, and capex, underscoring demand for balance-sheet repair and growth capital.
- Real estate led allocations, followed by healthcare and industrials; capex funding and refinancing dominated deal rationale.
- Indian private credit funds outpaced foreign peers, highlighting rising local investor confidence and market maturity.
- Large deals (> $100 mn) were just 9% of deal count but contributed ~36% of total deal value.
- 45% target IRRs of 12–18%, while 55% aim for higher 18–24% returns.
Private credit has moved from niche to a core, long-term pillar of India’s credit ecosystem, with domestic capital now firmly in the driver’s seat.