# 1 Markets
Indian equity markets extended their winning streak for the fourth consecutive week, with the Sensex and Nifty rising 0.32%, closing near record highs. The rally was driven by strong Q2 earnings, renewed optimism around an India-US trade deal, and foreign institutional buying. However, cautious profit booking and signs of a slight economic slowdown prompted the market to consolidate at elevated levels.
Indian bond markets were largely rangebound in the holiday-shortened week, with the 10-year G-Sec yield closing near 6.53%, up about 2 basis points amid thin volumes and profit-taking. Foreign investors’ purchases of Indian government bonds surged 46x week-on-week to ₹55.5 bn reflecting improved confidence after the RBI’s aggressive rupee intervention and stated readiness to keep supporting the currency.
U.S. equity markets ended the week on record highs, powered by cooling inflation and expectations of a Federal Reserve rate cut soon. The Dow Jones rose 2.2% to 47,207, the S&P 500 gained 1.9% to 6,792, and the Nasdaq advanced 2.3% to 23,205. Easing CPI data at 3.0% YoY and strong tech earnings boosted sentiment, placing Wall Street on course for continued momentum into late October.
U.S. bond yields traded steady last week, with the 10-year Treasury ending near 4.02%, easing briefly below 4% after softer inflation data reinforced expectations of an imminent Federal Reserve rate cut.
# 2 RBI
2.1 RBI has proposed changes to risk weight [RW)treatment for NBFC infrastructure exposures- Key highlights:
- “High-quality infrastructure project” ≥1 year of satisfactory post-COD operations; loan classified standard; government/PSU-anchored and predictable revenues; strong protections (escrow, first charge, termination compensation); adequate funding; negative pledge on additional debt.
- — A narrow, protection-rich definition that screens for de-risked, cash-flow-stable projects.
- Risk-weight grid (Prudential Regulations).
- 50% RW for eligible projects with ≥10% of sanctioned amount repaid.
- 75% RW for eligible projects with 5–10% repaid.
— Capital charges step down with demonstrated repayment, aligning with observed credit performance.
- If a project ceases to meet criteria, revert to higher, general infrastructure risk weights. — Prevents “evergreen” capital relief and enforces continuous compliance.
RBI’s draft enables NBFCs to lower capital charges on proven, government-linked infrastructure loans—rewarding well-structured, performance-backed projects while denying relief to riskier private assets and aligning NBFC norms more closely with banks.
2.2 RBI released draft circular on Capital Market Exposure [CME] guidelines for commercial banks pursuant to announcement in Monetary Policy. Key highlights:
- Aggregate CME capped at 40% of Tier 1 capital on both solo and consolidated basis.
- Within this, direct CME including investment exposures and acquisition finance are limited to 20% of Tier 1 capital.
- Several exposures are excluded from these limits, including investments in subsidiaries, critical financial infrastructure institutions, Tier I/II debt instruments of other banks, and non-convertible instruments.
- For individual lending, loans up to ₹1 crore per individual against eligible securities, with specific LTV ceilings ranging from 60% for listed shares to 85% for AAA-rated debt securities.
- IPO/FPO/ESOP financing is capped at ₹25 lakh per individual with a minimum 25% cash margin requirement.
- Capital market intermediaries can access credit facilities on a fully secured basis with prescribed haircuts varying from nil for cash to 40% for listed equity shares.
- Guarantees to stockbrokers require minimum 50% collateral with 25% in cash.
- A new dedicated framework for acquisition finance allows banks to finance up to 70% of acquisition value, with acquiring companies required to contribute at least 30% equity.
- The aggregate exposure limit is set at 10% of Tier 1 capital, and strict eligibility criteria include requirements for acquiring only listed companies with three years of profitability.
This comprehensive overhaul represents RBI’s effort to create a more enabling yet prudent framework for bank financing of capital market activities, balancing growth facilitation with systemic risk management. As operation is limited to listed companies with profitability, role of Credit AIFs is not likely to be impacted.
2.3 Ministry of Finance has notified amendments to Banking Laws (Amendment) Act 2025 effective Nov 1, 2025,
- Bank customers can nominate up to four individuals per account to streamline claim settlements.
- Banks will allow only successive nominations (not concurrent) for lockers/safe custody.
- Public Sector Banks [PSBs] permitted to transfer unclaimed shares, interest, and bond redemption amounts to the IEPF, aligning with company law practice.
- PSBs empowered to determine remuneration of statutory auditors to strengthen audit quality.
- ‘Substantial interest’ threshold: Raised from ₹5 lakh to ₹2 crore (first revision since 1968).
A modernization push that streamlines claims (multi-nominee), aligns PSBs with IEPF norms, raises materiality thresholds, and tightens governance (audits, co-op board tenures) to improve transparency and oversight.
2.4 RBI has proposed mandating Unique Transaction Identifier (UTI) for all OTC derivative transactions (rupee IRDs, FX, credit derivatives, G-sec forwards) to enhance transparency, traceability, and global consistency in OTC derivatives reporting.
- UTI complements Legal Entity Identifier (LEI) already in force as per global payment requirements — LEI identifies counterparties, while UTI uniquely identifies each transaction.
- UTI will be assigned via a “waterfall” hierarchy — if not generated by counterparties, CCIL Trade Repository will create it.
- Cross-border reporting: If dual reporting required, market participants must ensure prompt submission of UTIs, with interim UTIs allowed within two business days.
RBI’s move to introduce mandatory UTIs aligns India’s OTC derivatives reporting with global best practices, strengthening market transparency and regulatory oversight.
2.5 In a big relief to bank customers, DoT has notified amended telecom cybersecurity rules to curb cyber frauds (e.g., phishing) and made it mandatory for DOT licence telcos while banks/Fis/Insurers may opt in voluntarily. Key highlights:
- Creation of a Mobile Number Validation (MNV) platform to verify if a mobile number’s KYC matches the user; telcos must onboard, others can access for a fee.
- Gives banks/NBFCs/fintech’s a legal mechanism to confirm number ownership during onboarding/account opening, plugging a current gap.
- E-commerce/food delivery firms are not covered but may use MNV if desired.
Targeted anti-fraud move enabling telco-verified mobile-KYC via an opt-in MNV platform for regulated users, albeit with persistent overreach and privacy-governance concerns. Telcos need to avoid overreach – possible application to all “telecommunication identifier user entities” and risks to consumer privacy.
# 3 SEBI
3.1 SEBI vide its notification last week barred mutual fund schemes from participating in pre-IPO placements of equity/equity-related instruments.
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- Mutual funds may invest only in the Anchor Investor portion or the public issue of IPOs. MF equity investments must be in listed or to-be-listed securities.
- Pre-IPO shares typically carry a six-month lock-in (non-promoter/non-anchor), adding liquidity risk—now avoided for MF schemes.
Impact:
- Prevents schemes from holding unlisted shares if an IPO is delayed or cancelled, ensuring compliance.
- No price advantage in QIB/anchor (same as IPO price); alpha from pre-IPO pricing is no longer accessible to MFs
- With many IPOs priced at a premium, near-term listing gains are uncertain, reinforcing the prudential stance.
The proposed move cuts unlisted-share/compliance risk but curtails early-stage allocation upside and flexibility.
3.2 SEBI has proposed uniform process for opening MF folios and executing the first investment. Key features:
- Investor can start investing only after KRA completes KYC and the folio is marked compliant.
- Addresses the current gap in sequential KYC cases – Presently, AMCs run internal KYC, process the investment, then forward documents to KRA for final verification. If KRA finds discrepancies, folio status turns non-compliant until rectified in the KRA system.
- Presently, there is rise in unclaimed redemptions/dividends and operational friction for AMCs and investors.
- AMCs cannot deliver physical communications to unit holders when details are incorrect and unclaimed payouts.
SEBI’s proposal aims to streamline mutual fund onboarding by gating first investments on KRA-verified KYC compliance, thereby reducing post-onboarding failures, unclaimed payouts, and operational friction.
3.3 SEBI last week issued guidelines permitting transfer of PMS business to another SEBI-registered portfolio manager with prior SEBI approval.
- Transfer can be full or partial (entire PMS or select investment approaches) within same group. Transferor may retain PMS registration.
- Only full business transfer allowed to outside entity. partial transfer not permitted.
- Transferor continues to act as Portfolio Manager until completion but cannot onboard new clients in this period.
- Transferee must assume all responsibilities and pending litigations/obligations/actions of transferor and provide a prescribed undertaking.
SEBI’s new PMS transfer framework streamlines consolidation and succession facilitating ease of doing business and process simplification in the PMS sector.
3.4 Supreme Court last week delivered a major judgement concerning minor’s rights on sale of immovable property:
Core legal issue
- Whether a minor (on attaining majority) must file a separate suit to set aside a guardian’s sale of immovable property executed without prior court permission under the Hindu Minority and Guardianship Act, 1956 (HMGA), or whether repudiation by conduct is sufficient.
Supreme Court’s judgment (solution)
- A guardian’s sale of a minor’s immovable property without court sanction is voidable, not void.
- On attaining majority, the former minor need not file a cancellation suit. The sale can be repudiated expressly (e.g., by filing a suit) or impliedly by unequivocal conduct—notably, by themselves transferring the same property.
- Of course, repudiation must occur within the applicable period of limitation.
- Subsequent purchasers claiming under the guardian’s sale, not the former minors, must seek legal remedies if they assert competing rights.
Impact:
- Heightened due diligence risk on titles stemming from guardian sales without court sanction; subsequent private transfers by the now-major child may defeat earlier unauthorized sales.
- Lenders must flag HMGA risk where original conveyance was by a natural guardian without court leave; require evidence that the now major has not repudiated (or obtain ratification/confirmatory deed).
Majors can repudiate unauthorized guardian sales by conduct without filing suit—confirming such sales are voidable and shifting title risk to purchasers, demanding tighter HMGA due-diligence.
# 4 Economy
4.1 Key takeaways and impact analysis from the RBI’s “State of the Economy – October 2025”
Growth & Demand
- India’s FY26 projection raised to 6.6–6.8%; reflects resilient domestic demand despite weak exports.
- Record GST e-way bills, strong digital payments, double-digit capex growth, and rural-auto revival underscore sustained consumption.
Fiscal & External Sector
- Central & state deficits higher YoY due to strong capex, weak tax buoyancy (direct tax −0.9%, customs −11.9%).
- Merchandise deficit widened to US$32.1 bn (13-month high) on gold/electronic imports; pharma exports may face new US tariffs.
- US$698 bn cover ~11 months’ imports; external vulnerabilities eased (debt/GDP 21%).
Industry & Services
- IIP/PMI: Manufacturing and services PMIs >57; steel, autos, cement robust; kharif acreage +0.6% YoY; rabi MSP up 4–10%.
- Renewable capacity >240 GW; GST on renewables cut to 5%; first geothermal policy launched..
Financial Conditions
- Bank credit growth: 11.4% YoY, outpacing deposits (9.9%); MSME, retail, and infra drive growth.
- Corporate bond spreads up 10–25 bps.
Domestic resilience stands out amid weak global backdrop. Low inflation, strong rural demand, high reserves, and reform momentum create space for calibrated monetary easing while global trade tensions remain the main risk trigger.
4.2 As per S&P release last week
- HSBC Composite PMI: 59.9 in Oct (vs 61.0 Sep), lowest since May — still strong expansion, but momentum is easing.
- New orders growth eased to a 5-month low – demand cooling from elevated levels.
- Exports (composite): slowest rise since March – external tailwinds are fading.
- Services PMI: 58.8 in Oct (vs 60.9 Sep), slowest since May – expansion moderates notably.
- Sales softer on stronger competition and weather disruptions – mix of structural and transient drags.
- Foreign sales still favourable but slower – external demand is cooling.
- Manufacturing 58.4 in Oct (vs 57.7 Sep) – expansion re-accelerates.
- New orders slightly faster rise – domestic demand resilient.
- Export orders: weakest since March, linked to US tariffs – external drag emerging.
Manufacturing resilient; services cooling — growth composition tilts toward goods. PMIs remain well above 50 — expansion intact, but pace likely normalizing.
4.3 Deloitte last Thursday revised FY26 GDP forecast to 6.7–6.9% (avg. 6.8%) – Signals steady momentum with an upgraded outlook versus prior estimate (+30 bps). Key drivers:
- Demand, accommodative policy, and reforms (incl. “GST 2.0”) as drivers
- Low inflation to aid purchasing power
- Festive-quarter consumption to lead; private capex to follow
- MSME empowerment flagged as next policy frontier – Employment, exports, and investment multipliers targeted for durable growth.
Deloitte nudges India’s FY26 GDP to ~6.8% in line with RBI, driven by domestic demand and reforms, but cautions that sticky core inflation, higher-for-longer U.S. rates, and trade uncertainties may constrain policy space and temper momentum
4.4 As per data released by Govt. last week
- Core sector growth eased to 3.0% YoY (three-month low) in Sep-2025, from 6.5% in Aug-2025 (revised), vs 2.4% in Sep-2024.
- 4 of 8 sectors contracted — coal (-1.2%), crude oil (-1.3%), natural gas (-3.8%), refinery products (-3.7%).
- Other four contributed – Steel +14.1% (standout) cement +5.3% electricity +2.1% fertilisers +1.6%
- H1 FY26 core growth: 2.9% vs 4.3% in H1 FY25; only steel, cement, electricity grew over Apr–Sep; five sectors saw contraction.
Energy-led drag tempered momentum while steel prevented a deeper slowdown; near-term industrial prints may stay soft.