Market Outlook
| March 31, 2026 | 1 Month |
1 Year |
|
| Rupees per Dollar | 94.83 | 90.98 | 85.79 |
| Oil (dollars per barrel) | 112.78 | 72.48 | 74.03 |
| Retail inflation (CPI) | 3.21% (February) | 2.74% | 3.49% |
- The ongoing geopolitical tension has pushed crude oil prices above $100 per barrel. This has put pressure on the government bond yields with the 10Y benchmark yield rising above 7%, while longer tenor yields rising to 7.80% – 85% range
- RBI conducted liquidity operations in the form of OMO to support the bond yields but markets continued to remain under pressure. RBI also undertook steps to curb Rupee volatility by restricting speculative positions, helping Rupee to retrace from the highs of 94.85 to around 93.00
- We expect RBI to maintain a pause in the upcoming policy while revising the inflation target upwards. Reduction in the FY27 gross borrowing (from ₹17.20 to ₹16.09 lakh crores) with a lower than expected supply in the longer tenor, may give some support to bond yields at these levels. We expect 10Y benchmark to trade in 6.90%-7.15% range
- Developments on the geopolitical front and the demand for central and state borrowing during H1 FY27 will remain the key monitorable from debt market perspective
| Index | 1 month (%) | 1 year (%) | 3 years (%) |
|---|---|---|---|
| NIFTY50 | -11.3 | -5.1 | 8.8 |
| BSE100 | -11.5 | -4.8 | 10.0 |
| NIFTY500 | -11.4 | -3.8 | 12.1 |
| NIFTY Midcap100 | -10.9 | 1.9 | 20.6 |
At March 31, 2026
Nifty was down 11.3 % for the month of March 2026
- Sharp correction in NIFTY was on the back of escalating geopolitical conflict in the Middle East, consequent increase in crude oil prices and high FII outflows
- Within BSE 100 index, amongst sectors Infrastructure / Pharma & Healthcare outperformed while EPC / Finance underperformed the broader market
We change our stance from neutral to positive in the short term; in medium term we continue to remain positive
- The Nifty’s one year forward FY27 P/E at 17x, is below its 5-year average
- Earnings growth is expected to be in early teens for FY26-FY28
- In this context, valuations are looking for reasonable post the recent correction, hence we have changed our stance to positive
- However, prolonged conflict in Middle East and consequent supply chain disruption remains key risk
In the medium term, we expect certain important drivers for growth:
- India’s growth outlook is supported by twin policy easing to support domestic demand
- Policy support for domestic manufacturing along with trade deals are expected to support growth over the medium term
COMP/DOC/Apr/2026/64/0034
