# 1 Markets
1.1 Indian equities traded range-bound last week with a mildly negative bias, as benchmark indices consolidated after recent gains. Due to profit booking, Nifty 50 closed at 26042 while Sensex, closed at 85041. For 2025 YTD the Nifty 50 has delivered an annualised return of about 10–11% while the Sensex has generated~ 8–9%, reflecting a modest up-move in large-cap Indian equities. As we enter into 2026, the Indian equity market is at a pivotal juncture—shifting away from a period led largely by domestic liquidity toward a phase where earnings execution, policy coherence, and macroeconomic stability are set to drive returns.
1.2 In 2025, the IPO market averaged nearly one listing a day, raising about ₹1.75 lakh crore in total and it appears the story has just begun with more line ups for 2026.
1.3 Indian bond yields edged higher last week amid liquidity tightening and supply pressures, with the 10-year G-Sec closing at 6.60% on Dec 26, up 3 bps from prior session. RBI’s liquidity measures provided some support, but benchmark yields remained elevated versus recent lows, reflecting cautious sentiment.
1.4 US equities logged modest weekly gains in a holiday-shortened period with S&P 500 up 1.4% to ~6,932, Nasdaq rising 1.2% to 23,613 amid tech strength, and Dow advancing 1.2% to ~48,711. Thin volumes prevailed, supporting rotation into cyclicals while AI leaders like Nvidia sustained momentum post-record highs.
1.5 US 10-year Treasury yields edged up modestly closing at 4.14% amid thin volumes. The curve steepened slightly with short-end stability, reflecting resilient economic data and Fed hold expectations despite year-end positioning.
# 2 RBI
2.1 Key highlights from SIDBI-Crif High Mark report on “Small Business Spotlight”
- Small business credit at ₹46 lakh crore, up 16.2% YoY; loan accounts up ~12% YoY to ~7.3 crore.
- ~80% of credit and ~90% of borrowers; fastest growth in sole proprietors with entity presence (~20% YoY), signalling formalisation.
- Private banks lead enterprises; NBFCs hold ~42% share in sole proprietor lending and continue gaining.
- Enterprises skew to working capital (~57%); sole proprietors led by LAP. Unsecured business loans up ~31% YoY.
- Services fastest growing (~20% YoY); growth stronger in smaller states and beyond top 100 locations, while metros remain concentrated.
- PAR 91–180 down to ~1.4%; rising low-risk borrower share due to better underwriting and data.
- Credit up ~17% YoY (faster than national); aspirational districts >22% YoY, PSBs dominant, NBFCs expanding, risk profile improving.
Overall, the data underscores a broad-based, formalising small-business credit cycle—marked by strong growth, deeper non-metro reach, rising NBFC participation, and improving asset quality despite faster unsecured loan expansion.
2.2 RBI Bulletin (Dec 2025) – State of the Economy – Key highlights
- Growth Resilience: Real GDP grew 8.2% in Q2 FY26 (six-quarter high), driven by private consumption (7.9%) and fixed investment (7.3%); GVA rose 8.1%, led by services (9.0%) and industry (7.9%).
- Demand & Activity: High-frequency indicators stayed strong in November—e-way bills +27.6% YoY, digital payments +27.2%, petroleum consumption +3.0%. Urban demand improved (PV sales +19.7%, air traffic +6.7%); rural demand rebounded (tractor sales +56.5%).
- Inflation: CPI at 0.7% in Nov (still below lower tolerance), with food deflation easing and fuel inflation rising; core inflation stable at 4.3% (2.4% ex-precious metals).
- External Sector: Merchandise trade deficit narrowed to $24.5 bn in Nov as exports surged (+19.4%) and imports fell (-1.9%). CAD improved in Q2 FY26, supported by services surplus and remittances.
- Capital Flows & FX: Net FPI outflows of $2.1 bn in FY26 so far; forex reserves >11 months of import cover; rupee depreciated mildly with low volatility.
- Financial Conditions: Bank credit +11.5% YoY (deposits +10.2%); liquidity surplus moderated amid RBI OMOs and swaps; equity markets volatile but supported by DIIs.
Overall, India stands out as a growth outlier with strong domestic demand, benign inflation, and improving external balances, even as global growth and policy uncertainties persist.
# 3 SEBI
3.1 SEBI last week has refined the Basic Services Demat Account (BSDA) framework
- To exclude Zero Coupon Zero Principal (ZCZP) bonds and delisted securities from the valuation threshold for eligibility determination.
- This change, effective March 31, 2026, simplifies access for small investors and eases compliance for depository participants (DPs).
The update addresses prior ambiguities in valuing illiquid assets, promoting financial inclusion.
3.2 SEBI last Wednesday simplified issuance of duplicate securities – key takeaways
- Simplified documentation limit raised to ₹10 lakh from ₹5 lakh.
- Fewer documents for securities up to ₹10 lakh; documentation rationalised even for >₹10 lakh cases.
- Introduced a uniform Affidavit-cum-Indemnity Bond format and no notarisation needed for securities up to ₹10,000.
Overall, SEBI’s move may help faster processing, meaningfully cuts friction in restoring investor rights, reinforcing ease of investment while nudging the market decisively toward dematerialisation.
# 4 Economy
4.1 Govt is revising methodology for GDP estimates – Key points
- GDP base year to shift to 2022–23; revised national accounts series to be released in early 2026
- Not to resolve debates on India’s “true” growth, but to improve transparency, consistency, and user understanding of GDP methodology and its constraints.
- Methodological changes are aimed at internal consistency, not mechanically raising or lowering GDP growth.
- Moves away from blunt proxies and static ratios by leveraging new administrative and survey data unavailable during the 2011 series.
- Expanded use of corporate filings (MGT 7/7A) allows finer allocation of value added across activities instead of assigning multi-activity firms to one sector.
- Improved treatment of pensions reflecting old vs new schemes. Better imputation of government-provided housing, aligning India closer to international norms.
- Private consumption estimates draw on a broader mix of surveys, administrative data and commodity-flow methods.
- Shift toward double deflation in manufacturing where data permits.
- Acknowledges limits in services due to weak price indices—a data constraint, not intent-driven choice.
- Key limitations:
- GST data not yet systematically usable for national accounts due to institutional and analytical gaps, despite its potential.
- Lack of regular, robust service price indices.
The proposed revision represents institutional progress, improving how GDP is measured and explained—advancing the quality of debate even if they do not deliver definitive or politically convenient answers.
4.2 As per data released by Govt. last week
- Eight core industries grew 1.8% YoY in November, reversing a 0.1% contraction in October, but growth stayed modest.
- Strong gains in cement (+14.5%), steel (+6.1%), fertilizers (+5.6%) and coal (+2.1%), led by infrastructure push and base effects.
- Crude oil, natural gas, refinery products and electricity (-2.2%) continued to contract, capping overall momentum.
- Cumulative performance: Core sector output rose 2.4% YoY during April–November FY26.
Top of Form
Overall, November’s rebound was driven by infra-linked sectors and base effects, while persistent weakness in oil, gas and power underscores still-fragile industrial momentum.
# 5 PE/VC
5.1 India VC Funding Report 2025 – Venture Intelligence report
- Funding moderates: 2025 YTD VC funding fell 11% to ~$9.9 bn, while deal activity stayed stable (~905 deals), reflecting selective capital deployment.
- Reset, not slump: Market has normalised to a sustainable ~$10 bn base, well below the 2021 liquidity-driven peak.
- Early-stage resilience: Early-stage deal value rose 24% to $2.5 bn, despite fewer deals.
- Late-stage pullback: Growth-stage funding declined 8% as mature startups pivot to IPOs, pre-IPO routes, and structured/debt financing.
- Sector shift: E-commerce still leads, fintech improves, while AI and Deep tech surge (~50–60% growth).
India is currently witnessing a more disciplined, IPO-led, and maturing VC ecosystem with steady entrepreneurial activity.
5.2 India Private Equity – Key Takeaways (KPMG Pulse of PE Q3’25)
- PE investments moderated in 2025 amid global uncertainty from geopolitics and shifting trade/tariff policies.
- USD 14.9 bn invested across 217 deals till Q3’25 vs USD 26.3 bn across 289 deals in full-year 2024.
- At current pace, 2025 may be the slowest PE year since 2019, and lowest deal volumes since 2020.
- Despite near-term moderation, long-term PE interest in India remains strong.
- India attracted USD 20+ bn annually during 2020–24, with deal volumes peaking in 2024.
- Global PE firms increasingly act as “business builders”—local teams, majority/control stakes, active operational involvement.
- Continued interest in technology, healthcare, life sciences and financial services.
- Move from traditional IT services to SaaS; growing interest in AI-enabled manufacturing.
- Financial services breadth: Investments across banking, NBFCs, insurance, wealth management and fintech.
Slowdown likely to persist until global trade clarity improves; competition for quality assets may lift valuations as conditions stabilise
5.3 Key highlights from report released by Tracxn last week
- India’s Deep tech startups raised $1.55 bn across 264 deals in 2025, slightly higher than $1.4 bn in 2024
- Capital is increasingly flowing to startups beyond PoC/lab stage, with focus on commercialisation.
- Early-stage rounds crossed $850 mn (over half of total), up from $690 mn in 2024; however, initial cheques fell to $277.4 mn from $332.9 mn.
- VCs expect annual funding to stay in the $1–1.5 bn range over the next two years, with a pickup likely in 2027–28.
- Drivers ahead: Policy support, Research Development Incentive fund, maturing startup pipeline, and rising interest from family offices, global funds and LPs.
- Subsector divergence: Semiconductors, defence-tech, quantum and spacetech attract capital; others face reassessment due to risk and long gestation.
- Semiconductors lead: Chip and design startups raised $191.1 mn in 2025, sharply up from $41.4 mn in 2024, aided by government incentives and supply-chain shifts.
- Space tech steady: Funding at $93.7 mn in 2025, versus $68.9 mn in 2024 and $139.2 mn in 2023.
Overall, India’s deep tech funding is inching up but remains subdued, with momentum hinging on policy support and the transition of startups from early validation to scalable commercial maturity.