# 1 Markets
1.1 The Indian equity market experienced a volatile, holiday-shortened week ultimately ending 1.27% lower as the Nifty 50 settled at 22,819.60 and the Sensex at 73,583.22. The week was defined by a “see-saw” sentiment: a massive 2.5% crash on Monday was followed by a mid-week recovery, only for Friday to witness another 1,690-point Sensex plunge, caused by deepening geopolitical tensions between the US and Iran, Brent crossing the $100 barrel, and INR touching 94.82. We expect the selling pressure to persist into next week, with institutional investors likely to square off positions ahead of the financial year-end.
1.2 The 10-year bond yield surged to end at 6.94%, its highest level since July 2024, as the market reacted to a sharp sell-off in government securities. Investor jitters were driven by a combination of higher crude, a record-low Rupee, and a surprise excise duty cut on fuel that sparked fresh concerns over India’s fiscal deficit and future RBI rate hikes.
1.3 The US equity market recorded its fifth consecutive weekly loss, its longest losing streak in four years, as the S&P 500 fell 2.1% to 6,368.85 and the Nasdaq sank 3.2%. Despite a brief Monday rally on de-escalation hopes, the “fog of war” returned as Brent crude surged past $104.
1.4 The US bond market saw yields surge to their highest levels of the year during the week of March 23, 2026, with the 10-year Treasury yield climbing to 4.44% as persistent oil shocks from the Iran conflict fuelled inflation fears.
# 2 RBI
2.1 As per RBI data released last week
- Banks’ funding profile is tightening, with deposit growth continuing to trail credit expansion.
- As of March 15, deposits grew 10.8% y-o-y vs. 13.8% growth in advances—widening the gap to ~300 bps.
- This divergence has increased from a fortnight ago, when credit and deposit growth stood at 14.5% and 11.9%, respectively.
- Reflecting this imbalance, the credit-deposit (CD) ratio rose to a record 83.04%, up from 82.38% two weeks earlier and surpassing the previous peak of 82.47% recorded on February 14.
Elevated CD ratios amid slower deposit accretion point to tightening system liquidity and increasing reliance on alternative funding sources
2.2 Govt has brought significant changes in MSME Credit Guarantee Scheme -Key changes
- Includes service-sector MSMEs (earlier manufacturing-focused).
- Up to ₹100 crore loans for plant & machinery with 60% sovereign-backed guarantee via NCGTC.
- Minimum machinery component cut to 60% (vs 75%) → easier project structuring.
- Guarantee tenure extended to 10 years → aligns with project payback cycles.
- Exporter-focused window:
- Eligible if ≥25% export share (last 3 years); Loans up to ₹20 crore with 75% guarantee cover; First-year guarantee fee waived + lower upfront cost (2%) with performance-linked refunds
Impact:
- Partial sovereign guarantee reduces lender risk → higher MSME loan approvals, especially for capex.
- Inclusion of services widens credit access → better formalisation and scaling of SMEs in logistics, IT services, etc.
- Risk-sharing + fee waivers likely to increase lender participation, though underwriting discipline remains key.
Targeted credit-risk sharing + exporter incentives → incrementally positive for MSME capex, exports, and manufacturing growth, but real impact depends on on-ground credit uptake and demand conditions.
# 3 SEBI
3.1 Key decisions by SEBI at its Board Meeting on 23rd and their impact
The meeting approved multiple regulatory reforms aimed at enhancing ease of doing business, improving market efficiency, and strengthening governance standards. Below are the six major decisions:
- Alternative Investment Funds (AIFs) — Wind-Up Flexibility & Inoperative Fund Status
- Under the old rules, AIFs had to distribute all liquidation proceeds to investors and reach a zero-bank balance before surrendering their registration.
- SEBI has now fixed this by allowing AIFs to retain proceeds beyond the permissible fund life under specified conditions — including a demonstrable litigation notice or tax/regulatory demand.
- AIFs in this situation will be tagged as “inoperative funds” with a lighter compliance load: no periodic filings, no PPM updates, no performance benchmarking. They stay on SEBI’s radar but aren’t burdened unnecessarily.
- Foreign Portfolio Investors (FPIs) — Net Settlement of Funds
- SEBI approved net settlement of funds for outright transactions in the cash market — transactions where the FPI either buys or sells (not both) a security in a settlement cycle.
- The securities leg will still settle on a gross basis, and STT/stamp duty will continue to apply on delivery.
- This addresses the funding cost burden and foreign exchange slippage that FPIs currently face under gross settlement.
- Social Impact Funds (SIFs) — Democratising Retail Access
- The Board approved amendments to reduce the minimum investment by individual investors in the Social Impact Fund category of AIFs to ₹1,000 from the existing ₹2 lakhs.
- This aligns with the minimum application size for Zero Coupon Zero Principal (ZCZP) instruments, fostering a broader and more inclusive Social Stock Exchange ecosystem.
- InvITs & REITs — Operational Flexibility
- InvITs can continue holding a SPV after its concession agreement ends — they now have 1 year to either exit or bring in a new infrastructure project, accounting for pending litigations and defect liability periods.
- InvITs and REITs may now invest idle cash in liquid mutual fund schemes with a credit risk value of at least 10 (AA and above), expanded from the earlier threshold of 12 (AAA only).
- Privately listed InvITs can now invest up to 10% of assets in greenfield (under-construction) infrastructure projects, matching the flexibility already available to publicly listed InvITs.
- InvITs with leverage between 49–70% of asset value can now use fresh borrowings for capex, major road maintenance, and refinancing.
- Conflict of Interest & Governance
- Trading restrictions will now apply to senior officials, including the Chairman and Whole-Time Members (WTMs), who will also be brought under the definition of “insiders”.
- Officials will be given structured options for handling their investments at the time of joining — including selling, freezing, or exiting under a defined plan.
- Investment exposure to a single SEBI-regulated intermediary by the Chairman, WTMs, and employees is capped at 25% of the financial portfolio, with recusal obligations upon breach.
- Chairman and WTMs are expressly included within the definition of “insider.”
The March 2026 SEBI Board meeting was heavy on ease-of-doing-business reforms — fixing practical bottlenecks for AIFs, FPIs, InvITs, and REITs that have accumulated over years. At the same time, the internal governance overhaul signals SEBI’s intent to hold itself to the same standards it expects of market participants. (post Madhabi Buch controversy)
3.2 Corporate Laws (Amendment) Bill, 2026 — introduced in the Lok Sabha on March 23, 2026 – Key changes with focus on LLPs and Alternative Investment Funds (AIFs).
- Trust-to-LLP Conversion Framework
- This is a structural gamechanger, as currently ~97% of AIFs operate as trusts, largely because LLP conversions were not possible.
- New Section 57A and the Fifth Schedule of the LLP Act allow a “specified trust” registered with SEBI or IFSCA to convert directly into an LLP. The conversion requires consent of 75% of investors.
PE/VC funds predominantly structured as trusts can now migrate to LLP form without disrupting ongoing operations, contractual relationships, or legal proceedings — a clean, statutory transition pathway that did not exist before.
- Reporting framework simplification
- LLPs regulated by SEBI or IFSCA will no longer need to file immediate reports on every partnership change — instead, they can furnish partner details to the Registrar annually. This directly reduces the operational burden on AIF fund managers dealing with frequent LP on-boarding and exits.
- Annual filing (compared to earlier requirement of filing within 30 days) aligns with how fund LLPs actually operate and removes a major compliance pain point for AIF managers
This is a major operational relief for Category II and Category III AIFs structured as LLPs, where investor churn is frequent and the 30-day window was routinely breached, creating technical default risks.
- Recognition of Specified IFSC LLPs
- The amendment bill introduces specified IFSC LLPs as a distinct category under the LLP Act, 2008.
- This classification creates a specialised legal and regulatory framework for LLPs operating in financial services within IFSCs, subject to dedicated sectoral oversight.
- Foreign Currency Operations for IFSC LLPs
- Specified IFSC LLPs must account for and disclose partner contributions in a permitted foreign currency. LLPs already operating in IFSCs must convert partner contributions from INR to foreign currency within a prescribed timeline.
- Post-amendment, no new contributions can be accepted in INR. Such LLPs are required to maintain books of account and financial statements in foreign currency, with limited flexibility to use INR if permitted by the regulator.
This is particularly relevant for GIFT City-based AIFs which receive foreign capital, as it eliminates the currency mismatch in accounting and aligns with global fund standards.
- Fast-Track Mergers — Expanded Scope
- The Bill significantly broadens the scope of Section 233 (Fast-Track Mergers), which allows companies to bypass the lengthy NCLT process by seeking approval from the Regional Director.
- Fast-track mergers now cover transactions between holding companies and their subsidiaries, as well as a broader class of small companies and startups.
Portfolio companies of AIFs can restructure more efficiently, reducing time and cost of merger processes — important for exit planning and consolidation strategies.
- Decriminalisation of Procedural Defaults
- The Bill decriminalises several offences under both Acts, imposing civil penalties instead of imprisonment or fine, covering wilful failure to furnish information, contravention of rules, failure to furnish documents to the Registrar, violation of books of account requirements, and failure to comply with Registrar requisitions.
Fund managers and LLP designated partners faced disproportionate criminal exposure for administrative lapses. Civil penalties are more proportionate and less deterrent to participation.
- Other changes:
- The paid-up share capital limit has been increased from INR 100 million to INR 200 million, and the turnover threshold has been raised from INR 1 billion to INR 2 billion, enabling a larger number of entities to benefit from reduced compliance requirements.
- The amendment raises the net profit threshold for CSR applicability from INR 50 million to INR 100 million.
- Companies can now hold both AGMs and Extraordinary General Meetings either entirely through video conferencing or in a hybrid format combining physical and virtual participation.
The Corporate Laws (Amendment) Bill, 2026 marks a decisive shift from treating AIFs and fund LLPs as incidental users of corporate law to recognising them as distinct, institutionally regulated vehicles — long overdue, and directionally right, though the proof will lie in the rules yet to be notified
3.3 SEBI proposes allowing mutual fund investments through prepaid gift instruments (PPIs)
- Buyer purchases a gift card (digital/physical) → transfers to recipient → recipient redeems to invest via AMC platform
- ₹10,000 cap per gift PPI; Non-reloadable; 1-year validity; ₹50,000 annual investment cap per investor (across PPIs/e-wallets/cash per MF)
- Full investment required (no idle balances)
- Giver can suggest schemes, but final choice rests with recipient; direct or distributor route allowed
- Unclaimed PPIs after 1 year → refunded to purchaser’s bank account
A controlled, low-ticket gifting route to democratise MF access while managing misuse risks. But the moot question to be resolved is while PPIs governed by RBI, MF transactions remain under SEBI and how this regulatory conflict would be addressed
3.4 SEBI ICDR (Amendment) Regulations, 2026 – Key Takeaways
- Mandatory filing alongside draft offer documents (e.g., DRHP), offering a concise, structured snapshot of the issue; to be hosted across issuer, SEBI, exchange, and lead manager websites.
- Eliminates physical abridged prospectus with application forms; replaces with QR codes and web links to access offer documents—reducing paperwork and aligning with digital participation trends.
- Revised Schedule VI introduces a uniform format covering business overview, industry context, 3-year financials, KPIs, key risks, and promoter shareholding.
- Word limits and structured sections curb excessive technical detail, making disclosures more investor-friendly and comparable across issuers.
- Mandatory summaries of contingent liabilities and related party transactions, strengthening scrutiny of critical risk areas.
A disclosure + digitisation reform that sharpens investor communication while reducing process friction—balancing investor protection with ease of doing business in capital markets.
4.0 Income Tax Revision
Parliament last approved revision proposal in the Income Tax Act. The revised IT Act 2025 consists of 536 sections across 23 chapters and 16 schedules, and aims to modernise the direct tax system, simplify compliance, and reduce litigation. The new rules also reduce the number of rules from 511 to 333, making the framework more concise. Key Changes
- “Tax Year” Replaces “Previous Year / Assessment Year”
The ITA 2025 introduces a unified “Tax Year”, eliminating the prior distinction between “previous year” and “assessment year” found in the ITA 1961. This simplifies how taxpayers refer to the period of income and its assessment.
- Revised Return Filing Window Extended
- Section 263 of the ITA 2025 will allow taxpayers to revise returns up to twelve months from the end of the tax year (extended from nine months), providing more opportunity for corrections. A small fee will apply if you revise it after the initial 9-month window.
- An expanded 48-month window to file updated returns comes into force, alongside new rules on MAT, TCS, and education/hostel allowances.
- For individuals with business or professional income (ITR-3 or ITR-4 without audit), the due date has been extended from July 31 to August 31. For salaried taxpayers filing ITR-1 or ITR-2, the deadline remains July 31.
- TDS/TCS Rationalisation
- Changes operative since April 2025 are now legislatively codified under the IT Act 2025 from April 2026, with revised TDS thresholds across various transaction types.
- For LRS remittances made for education or medical treatment, the TCS rate on amounts above ₹10 lakh has been reduced from 5% to 2%, reducing upfront cash outflow for families.
- Revised PAN/TAN Quoting Thresholds
- PAN will now be required only if total cash deposits or withdrawals exceed ₹10 lakh in a financial year (replacing the older ₹50,000 per day rule).
- The immovable property PAN requirement has been raised from ₹10 lakh to ₹20 lakh, and for motor vehicles, PAN is mandatory only for vehicles priced above ₹5 lakh.
- Residents purchasing property from NRIs no longer need to apply for a TAN — they can simply use their own PAN to deduct and deposit TDS, cutting down paperwork significantly.
- Perquisites & Allowances Updated
- Children’s education allowances, hostel allowances, and car facilities provided by employers have increased, matching actual market rates and inflation.
- Meal vouchers up to ₹200 per day are tax-free.
- Four new tech cities — Bengaluru, Pune, Hyderabad, and Ahmedabad — are now included in the 50% HRA exemption category, taking the total to 8 cities.
- Disallowance of Interest Deduction on Dividend/MF Income
- Under Section 93(2), any deduction for interest incurred to generate dividend or mutual fund income will be completely disallowed, removing the earlier 20% ceiling benefit and potentially increasing taxable income for investors earning such passive income.
The overarching thrust is simplification without increasing tax burden — same rates, cleaner law, better compliance infrastructure. The new Income Tax Act, 2025 is less a tax reform and more a long-overdue housekeeping exercise — same tax, simpler rules, and a nudge to say: India’s tax machinery has finally entered the 21st century.
# 5 Economy
5.1 Gulf War prompts downward revision in India’s growth
- Growth estimates now range widely from ~6.1% (OECD) to 7.1% (S&P Global), reflecting a split between geopolitical downside risks and domestic resilience.
- West Asia tensions could cut 50–60 bps from growth, via higher crude ($85–100/bbl), supply disruptions (Hormuz), and weaker demand—hurting multiple sectors and pushing inflation toward ~4–5%. (ICRA)
- Goldman Sachs slashed India’s 2026 growth forecast to 5.9% compared to its pre-Iran war estimate of 7%, while pencilling a 50 basis-point increase in policy rates.
- S&P Global highlights strong consumption, improving private investment, and exports as buffers, with medium-term growth seen steady at ~7%+.
India’s FY27 outlook is increasingly a tug-of-war between geopolitical oil shocks dragging growth lower and domestic demand resilience keeping it anchored near ~7%.
5.2 As per S&P Global release last week
- HSBC flash PMI composite output index fell to 56.5 (Mar) from 58.9 (Feb) — slowest expansion since Oct 2022.
- domestic) demand slowed, with new orders growth at a 3+ year low, despite record export orders.
- Manufacturing PMI fell to 53.8 (from 56.9 in Feb); weakest since Sep 2021
- Services PMI fell to 57.2 (from 58.1 in Feb) signalling a slower yet still solid expansion in the services sector
- Cost pressures surge: Input costs rose at a 45-month high; firms partly absorbed this via margin compression despite raising selling prices.
- ~18 sectors affected (fertilisers, FMCG, textiles, chemicals, oil & gas) via input cost spikes, supply chain and LNG disruptions.
- Potential input-cost and food inflation shock over next 1–2 crop cycles; Kharif season at risk if disruptions persist.
External shocks are denting near-term momentum via demand and cost pressures, but India’s medium-term growth trajectory remains resilient—for now.
6 PE/VC
- APAC PE Exits Rebound, Net Distributions Turn Positive for First Time Since 2021 —
- Bain & Company’s latest report shows Asia-Pacific PE exits rebounded in 2025, with net cash flows to investors turning positive for the first time since 2021.
- However, total deal value fell 8% even as deal count rose 6%, indicating more but smaller transactions. India remains the region’s star performer with double-digit growth in both deal value and count.
- India VC Funding Hits $4.1 Billion in 440 Rounds Through March 2026 —
- Indian startups raised $4.1 billion across 440 equity funding rounds in Q1 2026 (through March), tracking ahead of the $10.5 billion raised in full-year 2025.
- Investors remain selective, with deal count still well below the 2021-22 peak, but average deal sizes are trending higher across growth-stage rounds.