Week ending 7th Feb 2026

# 1 Markets

1.1 Indian equity benchmarks closed last week higher, supported by post-Budget consolidation, progress on a US–India trade deal, and the RBI’s steady policy stance, even as global geopolitical risks and IT sector weakness capped gains. The Nifty 50 rose to 25,693.70, while the BSE Sensex advanced 1.6% to 83,580. Q3 earnings yet to ignite markets and as per a  published report, halfway through the season (263 / 500 companies) it is observed that – Revenue up by 12.1% and Adj. PAT up by 12.2%; PAT growth– Large cap 8.7%, Mid-caps 12.8% and small caps  39.9% FIIs appear to have returned with net inflows while sustained DII inflows keep cushioning intermittent FII outflows.

1.2 Indian bond yields edged higher last week amid projected higher borrowings by Govt., RBI’s steady repo rate at 5.25%, tight liquidity, and global rate pressures, increase in inflation forecast, absence of any additional liquidity measures and the benchmark 10-year government bond ended at 6.71% on Friday.

1.3 US equities showed mixed performance last week amid tech-led selloffs mid-week, storming back on Friday, with technology stocks recovering from their drops earlier in the week and Dow surged to a record 50,115 S&P 500 dipped to 6,932, and Nasdaq fell 1.8% to 23,031.

1.4 US 10-year Treasury yields edged lower from 4.241% to 4.206% last week amid safe-haven buying due to global geopolitical risks and Kevin Warsh’s nomination as next Fed chair pressuring yields.

# 2 RBI

2.1 RBI Feb 6^th Monetary policy –

2.1.1 Key policy highlights

• Repo rate unchanged at 5.25% on expected lines; stance neutral- RBI expects the policy rate to be lower for long period of time
• FY26 GDP growth projected at 7.4%.
• FY26 CPI at 2.1%; FY27 inflation near 4% target
• FX reserves at USD 723.8 bn- Provides strong buffer against capital flow volatility and currency pressures.
• Credit growth at 13.8% y-o-y, broad-based

2.1.2 Key Regulatory announcements/directives:

1. NBFCs

RBI proposes exempting NBFCs with assets ≤ ₹1,000 crore from mandatory registration.

• Applies to NBFCs that do not take public funds and have no customer interface (including some family offices).

Impact:

• Operational procedures for investment firms and family offices made simpler
• Company can be created for specific purpose of investing 100% own capital in financial assets (< Rs. 1000 cr.).
• Elimination of – maintaining Net owned funds of 2cr, filing periodic returns, adhering to strict liquidity and capital adequacy for smaller private entities.
• Addressed concerns regarding the 50:50 rule and freedom to create investment focussed entities. (50% in financial assets and 50% gross income from financial assets these forced companies to artificially adjust to acquire non-financial assets to remain below the 50:50 mark)

• Such entities pose low systemic risk. Reduces regulatory friction and operating costs; improves ease of doing business.

• Registration exemption will reduce compliance burden (audits, regulatory filings, disclosures).
• Allows RBI to focus supervision on larger, systemically important NBFCs.

• NBFC – ICCs engaged in gold loans do not henceforth require approval from RBI for opening new branches – presently they require approval where no of branches exceed 1000.
  • Bajaj Finance and Muthoot Finance, that offer gold loans are expected to benefit as this allows them to open branches freely. Chola, Mahindra & Mahindra, Shriram Finance and Tata Capital are among the other companies expected to benefit.

1. 
   Financial Inclusion

• Collateral-free MSME loan limit doubled to ₹20 lakh for priority sector tag.
  Impact: Strong positive for MSME credit penetration and informal-to-formal transition.

• Reforms to Lead Bank Scheme, KCC, BC model
  Impact: Improves delivery efficiency of priority-sector credit.

1. Customer Protection- digital frauds

• Proposed to compensate customers up to ₹25,000 for losses arising from small-value digital frauds, enhanced authentication requirements for transactions undertaken by senior citizens, and tighter conduct rules for lenders.

• 15% of the loss will be borne by the customer, 15% by the lender concerned, and the remaining portion by the central bank.
  • For instance, someone has lost ₹50,000 in a digital fraud. Then, 85% of that will be ₹42,500, and since the limit is ₹25,000, the person will get ₹25,000. In the second case, someone lost ₹20,000, and 85% of that will be ₹17,000. That person will get ₹17,000.

• • RBI’s rationale on the amount is – small value frauds constitute a small portion in value while constituting 65% of fraud cases (below ₹ 50,000)

• Proposed to issue guidelines to strengthen the safety of digital payments and frame comprehensive norms on loan recovery practices and the engagement of recovery agents.

 

Announcements underscore RBI’S role as a caring regulator as technology emerges both as a facilitator and risk factor in expanding the remit of formal banking in the country.

1. Revision in Deposit Insurance:

Risk-based premium framework for deposit insurance introduced, rewarding banks that manage risks better by giving them a discount of up to 33.3% with 8 paise per ₹100 being the lowest.

• All banks now pay the same premium of 12 paise for every ₹100 of assessable deposits, regardless of how risky or well-managed they are.
• Banks will be grouped into 4 risk categories—A, B, C and D. Category A banks, considered the safest, will pay 8 paise per ₹100 of deposits; Category D banks will continue to pay current rate of 12 paise. Risk assessment will be based on audited financial data and supervisory ratings.

1. Real Estate – Banks allowed to lend to REITs

• RBI will permit banks to lend directly to REITs at the trust level. This marks a shift in RBI’s stance, as banks were earlier insulated from direct exposure to the real estate sector due to perceived risks.
  • REITs now own ~20% of India’s institutional, rent-yielding real estate, making them systemically relevant. There are five listed REITs in India.
  • Opens a new, cheaper funding source for the real estate sector. Fund de-risked, cash-flow-generating assets Improve capital recycling in the real estate ecosystem.

1. Financial Markets

• Voluntary Retention Route [VRR] cap of Rs. 2.5 lakh cr. removed for FPIs.
  • VRR investments will no longer have a separate limit and will be subsumed under the general FPI investment limits.
    • Government & corporate bonds: capped at 6% /15% of outstanding stock
    • State Development Loans (SDLs): capped at 2%
      → Regulatory control over foreign ownership of Indian debt remains unchanged.
    • FPIs get greater operational flexibility, but retention period requirements continue.

Impact likely gradual, constrained by retention norms and global conditions. Over 80% of the earlier VRR limit had already been utilised, prompting the need for rationalisation. RBI has folded VRR into general FPI limits—boosting flexibility and long-term debt inflows while preserving strict caps on foreign ownership.

• Corporate Bond Derivatives
• Draft guidelines issued permitting derivatives trading in corporate bond indices and total return swaps (TRS). – to facilitate issuance of corporate bonds across the rating spectrum.

• • A Total Return Swap (TRS) is a derivative contract in which one party receives the total return of a bond—including coupon income and price appreciation or depreciation—without owning the underlying bond.
    • Market makers may offer TRS to resident entities, other than individuals,
    • TRS are explicitly prohibited for individual investors.

This marks a calibrated push by the RBI to deepen the corporate bond market by enabling risk management and liquidity through derivatives, while ring-fencing retail investors from complex instruments

In nutshell, with inflation firmly under control and financial stability intact, RBI is using policy continuity and targeted regulatory easing to quietly maximise growth optionality while insulating the economy from global shocks.

2.2 RBI plans a supervisory overhaul, moving away from checklist-based inspections to deeper scrutiny of banks’ business models.

• Focus shifts from isolated ratios to holistic risk assessment, examining how banks operate and generate risk.
• Supervision division may be strengthened, with additional hiring skewed toward cybersecurity and digital risk specialists.
  • Rapid expansion of India’s banking system, which is stretching legacy supervisory frameworks must have prompted this initiative.
  • Recent governance lapses (e.g., IndusInd Bank, New India Co-operative Bank) exposed limits of backward-looking, snapshot-based oversight.

RBI is signalling a shift from form-based supervision to substance-based oversight as bank size, speed, and complexity rise

# 3 Insurance 

3.1 Government has put on hold the clause restricting common directorships across insurers, banks and investment companies under the Insurance Laws (Amendment) Act, 2025.

• What was proposed: Individuals would have been barred from simultaneously holding board or officer roles in an insurer and a bank/investment company.
  • Bank-promoted insurers (e.g., SBI Life, HDFC Life) get breathing space as existing board structures remain intact.
  • While aimed at reducing conflicts of interest, the rule risked creating board vacancies and a shortage of experienced directors.

A calibrated pause that balances governance intent with operational reality, giving insurers time to adapt without destabilising board oversight. The deferral is also timely as it signals regulatory pragmatism as insurance reforms roll out amid greater foreign participation and competition.

# 4 SEBI

4.1 SEBI plans to allow automatic SWP/STP for mutual fund units held in demat form, aligning them with SOA-held units.

• Currently, standing instructions are available only in SOA mode; demat investors must initiate each transaction manually.
  • SWP enables periodic redemptions; STP allows automatic transfer between schemes within the same AMC.
• Existing demat process is complex, involving DP instructions, broker execution, exchange settlement, clearing, and registrar reconciliation for every transaction.
• Greater investor control, reduced dependence on brokers/distributors, and a more democratic framework.

By extending SOA-like automation to demat mutual funds, Sebi is closing a long-standing operational gap and putting investor convenience on par with market structure.

4.2 SEBI last Friday proposes allowing simpler liquidation framework for AIFs.

• Proposes allowing AIFs to retain small amounts beyond fund maturity to meet residual operational expenses (legal, audit, RTA, consultants, filings).
• Retained funds must be justified with invoices/precedents, used only for winding-up purposes, and the retention period capped at three years
• This addresses the current issue where AIFs must maintain a zero balance before surrendering registration, forcing full compliance despite no active fund activity.
• AIFs with no retained funds and no active investments, but existing only due to contingent claims (litigation/tax), may opt for inoperative status.
  • In cases involving contingent liabilities, 75% investor consent by value would be mandatory.

SEBI is pragmatically streamlining AIF exits by allowing limited fund retention and an inoperative status, cutting compliance friction without diluting investor safeguards. This helps AIFs to make exit from the market as clear and efficient as entry without compromising oversight.

4.3 SEBI is reworking Schedule II of the Intermediaries Regulations based on five years of enforcement experience, global best practices, and complaints of overly harsh compliance norms.

• Current “fit and proper” rules trigger automatic disqualification at a very early stage—mere filing of a Sebi complaint or charge sheet.
  • such rule-based triggers undermine the presumption of innocence and are inconsistent with its own regulations for exchanges/depositories.
• Convictions for economic offences or securities law violations to be explicit grounds for disqualification. Disqualification to apply only after a winding-up order, not merely when insolvency proceedings begin.
• SEBI proposes to align with international norms (IOSCO) and Indian regulators – RBI focus on convictions, not pending cases
  • Mandatory right to a hearing, and prompt disclosure of disqualification-triggering events by intermediaries.

Overall, Sebi is shifting from blunt, rule-driven bans to a more proportionate, principles-based regime that balances market integrity with fairness and regulatory discretion.

# 5 Economy

5.1 Last week’s announcement by US President that trade deal is done moved markets:                                                                                                                                                                                                                                                                                                   

• US cuts reciprocal tariff on Indian goods to 18% (from 25%); extra 25% Russia-oil penalty duty to be removed.
• India to reduce tariffs and non-tariff barriers on US goods to zero, per Trump’s statement.
• India to stop buying Russian oil, shift toward US (and possibly Venezuelan) energy, says Trump.
• India to buy $500bn+ of US energy, tech, agri, coal and other goods; higher “Buy American” commitment claimed.

• • India’s 18% below Bangladesh/Sri Lanka/Vietnam (20%), above Japan/Korea (15%); China still ~47.5%.

Comment: Devil is always in the details:

• Markets welcome headline relief, but scepticism remains on timelines, sector carve-outs and enforceability of zero tariffs/non-tariff barriers.
• The $500bn US purchase commitment and a full stop to Russian oil are seen as ambitious and hard to operationalise without cost inflation risks.
• Key exports still face Section 232 duties (steel, aluminium, autos), muting gains for metals and manufacturing.
• Markets note the deal’s political signalling is stronger than economic clarity, pending legal texts and reciprocal actions.

Sentiment-positive, but investors are pricing relief—not a full rerating—until execution risks clearTop of FormBottom of FormTop of Form

5.2 Bottom of Form

As per HSBC India PMI release last week

• Services momentum rebounds with Services PMI rising to 58.5 in January from 58.0 in December up from 56.6 a year ago.

• • Activity driven by strong output growth, steady fresh orders, and technology investments. Finance and insurance led growth in both output and new orders, despite slowing marginally from December.
• Manufacturing also firm with PMI edged up to 55.4 in January from 55.0 in December, supported by higher output and new orders.
• Composite PMI improves with PMI climbing to 58.4 in January from 57.8 in December, reflecting solid demand across services and manufacturing.
• Business confidence improves to a three-month high, supported by efficiency gains, marketing efforts and new client acquisitions.

January data point to a re-acceleration in services-led growth, with demand resilient, exports improving and cost pressures contained—for now.

# 6 PE VC

6.1 DPIIT has formally included deep tech startups in the Startup India scheme, easing regulations and expanding fiscal benefits.

• Deep tech defined as startups building technology that is yet to be developed or still under development.
• Deep tech startups can now avail Startup India tax benefits for up to 20 years (vs 10 years for others).

• Registered deep tech firms can carry forward losses for 20 years or till ₹300 crore turnover, whichever is earlier (vs 10 years/₹200 crore for non-deep tech). new restriction added on speculative or non-productive investments.

• • Policy recognises deep tech’s 7–8-year lab-to-revenue cycle, high capital intensity, and technical uncertainty.
  • Access to collateral-free loans, 80% cut in patent filing fees, and easier public procurement norms.
• State and multi-state cooperative societies brought under Startup India, aimed at boosting innovation in agriculture, rural and allied sectors.
  • Deep tech startups raised $1.6 bn in 2025 (11–12% YoY growth); early 2026 saw fresh raises across robotics, materials, aerospace and space tech.
  • India has 200,000+ DPIIT-recognised startups, but only ~2% avail income tax exemption under Section 80-IAC.

Initiative complements large government initiatives like the ₹1 lakh crore RDI fund, ₹10,000 crore Fund of Funds, and IN-SPACe–anchored Antariksh VC Fund. A clear policy signal that India is ready to back patient capital and long-gestation deep tech ventures to build globally competitive, IP-led businesses from the ground up.

6.2 PE/VC funding dropped nearly 3x year-over-year from $3.99-$4 billion in January 2025, driven by fewer mega deals (only 3 over $100 million vs. 11 prior year). Deal volumes remained stable at 104 vs. 105 last year, though slightly up from 78 in December 2025. Month-over-month value fell from $1.8 billion.

• Early-stage: $341 million across 57 deals (average $6 million, up from $3 million YoY).​
• Growth-stage: $234 million (average $9 million, down from $24 million).​
• Late-stage: $747 million (average $37 million, down from $111 million).​