# 1 Markets
1.1 Indian equities had a volatile week, with the Sensex and Nifty falling ~2–3% amid early sharp selling as West Asia tensions and a spike in crude triggered risk-off sentiment, weighing on broader markets. While domestic institutions offered partial support, persistent FII outflows kept markets choppy and capped any meaningful recovery, suggesting near-term stability may remain elusive.
1.2 Indian government bonds were also choppy, with the 10-year G-sec yield ending marginally higher around 6.68–6.70%. Yields briefly dipped mid-week on safe-haven demand amid geopolitical tensions, but global bond selloffs and higher crude kept sentiment cautious, even as RBI support and strong auction demand helped cap further rises.
1.3 Some key data point reflections published by a leading MF:
- South Korea returned 135%, China 35.7%, India just 2.3% in the year to Jan 2026
- Large cap (Nifty 50/Top 10) share of total market cap near all-time lows (~43%/19%) — relatively attractive vs broader market
- India’s 10-year real yield at 5.1% — 98th percentile of its own history — strongly favourable for debt
- Indian IT stocks underperforming Nasdaq by 57% on a rolling 3-year basis
- Drawdowns of 20–30% have been followed by 92–99% probability of positive 2-year returns
1.3 US equities had a negative week, with the Dow posting its worst weekly fall in nearly a year while the S&P 500 and Nasdaq declined ~1–2% as risk sentiment deteriorated. Surging oil prices amid Middle East tensions and a shock contraction in US jobs outweighed mid-week tech rebounds, driving volatility higher and prompting investors to trim exposure to cyclicals and growth stocks.
1.4 US Treasury markets were volatile, with yields initially falling on safe-haven demand before rebounding sharply by week’s end, pushing the 10-year back toward ~4.1–4.2%. Rising oil prices and inflation expectations overshadowed weak jobs data, leading markets to scale back Fed rate-cut bets and lifting yields across the curve.
# 2 RBI/Banking
2.1 As per data released by RBI
- Credit-Deposit (CD) ratio hit a record 82.5% (fortnight ended Feb 15), marking the fourth consecutive all-time high, as credit growth outpaced deposits by 281 bps.
- Bank credit grew 13.7% YoY to ₹204.3 lakh crore, significantly faster than deposit growth of 10.9% YoY (₹247.7 lakh crore).
- To bridge the funding gap, banks issued a record ₹1.34 lakh crore of Certificates of Deposit (CDs) in two weeks — the highest ever for any fortnight, signalling increased dependence on short-term market borrowing.
- CDs are increasingly used as a strategic liability tool for short-term asset-liability management and flexible bulk funding.
- Rising competition for deposits (as households diversify into non-bank financial assets) is pushing up deposit costs and slowing transmission of policy rate cuts to lending rates.
Strong credit demand amid slower deposit mobilisation is pushing banks toward higher CD ratios and greater reliance on market funding, even as system liquidity remains comfortable.
2.2 As per MFIN report released last week
- The microfinance sector’s total loan portfolio declined to ₹3.14 trillion as of December 31, 2025.- represents 7.3% fall compared to Sept 25.
- The industry served approximately 7.9 crore unique borrowers earlier in the 2024-25 fiscal year; NBFC-MFIs and Banks continue to remain the primary lenders
- The Q3 FY 25-26 data follow a period of volatility; for instance, the Q1 FY 25-26 period saw double-digit y-o-y declines in AUM for NBFC-MFIs.
While the pace of contraction is easing, the microfinance sector continues to face a tightening landscape with a ₹3.14 trillion portfolio reflecting a cautious shift in both lender reach and borrower participation.
2.3 RBI notified the Foreign Exchange Management (Guarantees) Regulations, 2026, comprehensively replacing the FEM (Guarantees) Regulations, 2000.
- The new framework governs cross-border guarantees involving persons resident in India and shifts from an approval-heavy model to a principle-based, eligibility-driven approach, while retaining the baseline prohibition structure.
- RBI also discontinued quarterly reporting on the issuance of guarantees for Trade Credit from the quarter ending March 2026, replacing it with a new standardised reporting format under the updated regulations.
Simplifies compliance for Indian companies with overseas subsidiaries and cross-border financing structures.
# 3 SEBI
3.1 SEBI last week has overhauled the AIF reporting framework, moving away from a purely quarterly system to a two-tier annual + limited quarterly model. Key changes:
- AIFs must now submit a comprehensive Annual Activity Report online through the SEBI Intermediary (SI) Portal within 30 calendar days from the end of March each year.
- AIFs will still submit a Limited Quarterly Activity Report within 15 calendar days from the end of each quarter, but with reduced scope compared to the earlier detailed quarterly format.
- No separate quarterly report is required for the March quarter, since the Annual Activity Report already covers those data points.
- Revised reporting formats will be published on the IVCA website within 3 days of the circular, and IVCA will assist AIFs in understanding requirements and resolving reporting issues.
Less frequent detailed reporting, one consolidated annual filing, and a lighter quarterly touch — reducing compliance burden while keeping SEBI informed on a structured cadence.
3.2 SEBI last week introduced Voluntary Debit Freeze for Mutual Fund Folios — Key Points
- Investors can lock their mutual fund folios, preventing any unit debits/redemptions until the folio is unlocked.
- Applicable to both demat and non-demat (Statement of Account) mutual fund folios.
- Lock/unlock facility will initially be available via MF Central, the interoperable platform run by industry RTAs.
- Only KYC-compliant investors with registered email ID and mobile number can use the feature.
- Association of Mutual Funds in India (AMFI) will define the operational process for AMCs and RTAs, including lock/unlock procedures.
- The move is part of SEBI’s recent push to strengthen investor protection, alongside new disclosure norms for market intermediaries posting securities-related content on social media.
SEBI’s voluntary debit-freeze facility strengthens investor protection and cyber-security in mutual fund accounts, giving investors greater control to prevent unauthorized redemptions.
3.3 SEBI made some changes in custodial process
- non-bank custodians to segregate their regulated and unregulated financial services through separate Strategic Business Units (SBUs), maintain separate accounts for each SBU, and meet net worth requirements independently for those businesses.
- Custodians must also disclose to clients if they provide unregulated financial services and obtain an acknowledgement that SEBI will not handle grievances related to such activities.
- Governance requirements have also been strengthened — custodians are required to establish board-level committees such as audit, nomination & remuneration, and risk management committees.
This structurally separates custodial and non-custodial business lines, reducing conflict-of-interest risk. It will affect custodians serving FPIs, mutual funds, AIFs, and portfolio managers, and may require some firms to reorganise internally.
# 4 Economy
4.1 As per HSBC PMI release last week
- HSBC India Services PMI fell to 58.1 in Feb (58.4 in Jan), with new business growth slowing to a 13-month low amid rising competition.
- International sales grew at the fastest pace since Aug, partially offsetting weaker domestic momentum.
- Operating costs rose at the fastest pace in ~2.5 years, driven by higher food, energy and labour costs.
- Firms passed on costs, pushing output prices to a 6-month high.
- Composite PMI rose to 58.9 (from 58.4), signalling the fastest private sector expansion in 3 months.
- The manufacturing PMI rose to a four-month high of 56.9 in February from 55.4 in January, supported by strong domestic demand.
India’s economy shows resilient services-led growth but emerging demand softness, with rising cost pressures and slowing industrial output signalling uneven momentum
4.2 As per data released by Ministry of company affairs last week,
- 24,136 new companies were registered in February, up 37% YoY and the second-highest monthly total in FY26, signalling strong entrepreneurial momentum.
- Registrations rebounded from ~15,000 in October and ~14,000 in November to ~23,280 in January, accelerating further in February.
- Most new entities are closely held private limited companies, with average paid-up capital ~₹6 lakh, indicating strong participation by small entrepreneurs.
- New incorporations are led by IT services, consulting, and professional services, reflecting the services-heavy structure of India’s economy.
- Around 300 AI-focused firms are incorporated monthly (248 in February), highlighting emerging tech entrepreneurship.
- Wholesale and retail trade registrations remain significant, aided by government-led digitalisation and formalisation efforts.
Strong growth in company registrations reflects rising entrepreneurial confidence, increasing formalisation of the economy, and policy-driven expansion of India’s startup ecosystem.
4.3 As per data published by RBI last week
- Current Account Deficit widened to $13.2B (1.3% of GDP) in Q3, from $11.3B (1.1% of GDP) a year ago, but lower than Q2’s revised $14.1B (1.5% of GDP).
- Merchandise Trade deficit widened sharply to $93.6B vs $79.3B YoY, driving the higher CAD.
- Net services receipts rose to $57.5B (from $51.2B), led by computer and business services exports.
- Net outgo declined to $12.2B vs $16.4B YoY, easing pressure on the current account.
- Personal transfers increased to $36.9B from $35.1B, providing support to external balances.
- Net FDI outflow widened to $3.7B vs $2.8B YoY.
- FPI saw marginal net outflow of $0.2B, sharply lower than $11.4B outflow a year ago.
- Reserves declined by $24.4B (ex-valuation), compared with $37.7B depletion in the same period last year.
Strong services exports and remittances cushioned the impact of a widening merchandise trade deficit on India’s external balance.
4.4 As per data published by Govt last week
- Industrial output (IIP) grew 4.8% YoY in Jan, slowing from 7.2% in Nov and 8.0% in Dec (revised); 5.2% growth in Jan last year.
- Industrial output FYTD (Apr–Jan): 4.0%, vs 4.2% in the same period last year.
- Manufacturing output: 4.8% YoY in Jan; 4.9% growth in Apr–Jan FYTD.
- Capital goods: +4.3% vs 10.2% YoY last year.
- Consumer non-durables: −2.7% vs +0.1% YoY last year.
- Consumer durables: +6.3% vs 7.1% YoY last year.
- Infrastructure & construction goods: +13.7% vs 7.3% YoY last year.
- Mining, manufacturing, power: growth in ~4–5.1% range.
Industrial growth remains positive, but momentum softened post-festive season, with infrastructure-led strength partly offset by weaker consumption and slower capital goods growth.
# 5 PE/VC
5.1 As per Fitch ratings report released last week
- U.S. private credit borrower defaults rose to 9.2% in 2025, up from 8.1% in 2024, marking a new high.
- 38 defaults across 28 borrowers among 302 tracked companies.
- Defaults concentrated among smaller issuers with ≤$25M EBITDA, within the middle-market segment (typically ≤$100M EBITDA, ≤$500M debt).
- Nature of defaults: Included both bankruptcies and distressed debt exchanges (lender-led restructurings).
- Floating-rate loan structures tied to the Fed funds rate—with limited hedging—significantly increased debt servicing burden.
- Elevated rates have left cash flows highly sensitive to interest costs, driving defaults.
- Despite a market sell-off in software companies, no software defaults were recorded in Fitch’s dataset.
Rising defaults highlight the growing strain of prolonged high interest rates on leveraged middle-market borrowers, exposing structural vulnerabilities in the floating-rate heavy private credit ecosystem.
5.2 Hurun Global Rich List 2026 published last week — Key Takeaways
- India now has 308 billionaires, adding 57 new entrants in one year, the highest increase outside the US and China.
- India ranks as the world’s 3rd-largest billionaire hub, with total billionaire wealth rising 10% to ₹112.6 lakh crore.
- Mumbai remains India’s wealth engine with 95 billionaires and ₹44.9 lakh crore in wealth.
- Mumbai added 15 new billionaires, more than New York (14) and London (9), highlighting strong domestic wealth creation momentum.
- However, Mumbai lost the title of Asia’s billionaire capital to Shenzhen, which now has 132 billionaires after adding 47 in a year.
- New York remains the world’s top billionaire city (146), while Chinese cities dominate the global list with 4 in the top 10.
India’s billionaire growth is accelerating rapidly, with Mumbai emerging as one of the fastest wealth-creation hubs globally despite China’s scale dominance.