Market Outlook
| July 31, 2026 | 1 Month |
1 Year |
|
| Rupees per Dollar | 95.39 | 94.67 | 87.60 |
| Oil (dollars per barrel) | 90.12 | 72.92 | 72.53 |
| Retail inflation (CPI) | 4.38% (June) | 3.93 | 2.31% |
- RBI kept the policy rates unchanged at 5.25% in August and maintained a neutral stance unanimously. The RBI also lowered its FY27 inflation target marginally to 5.0% from 5.1% earlier along with a slight upward revision in its GDP forecast to 6.7% from 6.6% earlier.
- The US Fed in its July meeting, also kept its policy rate unchanged ranging at 3.50% - 3.75%. The pause, however, was not unanimous, as 3 out of 12 members voted in favor of a 25 bps rate hike.
- On the domestic front, inclusion of Indian Government bonds in Bloomberg Global Aggregate Index was deferred. RBI measures to provide hedging on FCNR(B) deposit at zero cost and concessional forex swap window for PSUs to hedge ECBs has led to inflows of USD ~41 billion.
- Measures from RBI and Government along with fall in crude prices has helped Rupee and 10Y benchmark yield to stabilise. We do not expect any immediate rate hike by RBI and expect 10Y benchmark to trade in 6.60%-6.85% range.
| Index | 1 month (%) | 1 year (%) | 3 years (%) |
|---|---|---|---|
| NIFTY50 | 2.2 | -1.6 | 7.3 |
| BSE100 | 2.5 | 0.3 | 8.9 |
| NIFTY500 | 2.0 | 2.4 | 11.2 |
| NIFTY Midcap100 | 1.8 | 9.6 | 18.6 |
At July 31, 2026
Nifty was up 2.2% for the month of July 2026
- Better than expected Q1FY27 earnings, easing geopolitical worries and weakening global AI narrative supported Indian equity markets.
- Large cap index out-performed broader NSE500 index. Within BSE 100 index, Technology / Auto outperformed while Infrastructure / EPC underperformed the broader market
We maintain our positive stance over the short as well as medium term
- US-Iran continue to engage diplomatically and find a solution to end war.
- Pickup in monsoons led to rainfall deficit narrowing to 11% vs long-period average
- FIIs turned buyers in July; DII flows continued to remain strong
- Nifty’s FY27 P/E is at 21x and marginally higher than 5-year average
Over the medium term, we expect following drivers for growth to play out:
- Monetary as well as fiscal support from Central Govt. would continue to support the economy
- Free Trade Agreements sealed with major economies/ economic blocs like the EU, the UK, Australia, New Zealand, Qatar etc. to support domestic economy as well as enhance export opportunities.
- Focus on creating manufacturing ecosystem by way of Production-Linked Incentives (PLI), indigenization requirements, supply-chain diversification.
Market consensus for Nifty earnings CAGR over FY2026-28 at 15%
COMP/DOC/Aug/2026/68/0802
