Market Intelligence
India Macro Context
RBI signals, flows, rupee & domestic market developments
Indian equities ended FY26 on March 30 at their worst monthly level in six years, with Nifty closing at 22,331 and the rupee hitting an all-time intra-day low of 95.24 vs USD, driven by a sustained US-Iran war pushing Brent crude above $115/bbl. Goldman Sachs cut India's 2026 GDP forecast to 5.9%, raised the CPI outlook to 4.6%, flagged a possible 50bps RBI rate hike, and downgraded Indian equities from overweight to market weight. FII outflows in March exceeded ₹60,000 Cr while the government cut excise duty on petrol and diesel by ₹10/litre to cushion the crude shock.
Key Signals
Sectors Affected
Watch Next 7 Days
RBI MPC April 2026 meeting (expected first week of April): critical rate decision given crude/INR/inflation stress; Goldman flags 50bps hike risk to 5.75%; outcome will define near-term equity trajectory
US-Iran negotiations and Strait of Hormuz developments (ongoing): any ceasefire or escalation will be the single largest binary event for Brent crude, INR, and Indian equities in the next 7 days
February WPI data release (early April) and March CPI data (mid-April): will quantify inflation transmission from crude shock; elevated readings could harden hawkish RBI stance and trigger further earnings downgrades
Key Developments
The US-Iran war (now in week 5+) has driven Brent crude from ~$74/bbl pre-war to $115.50/bbl on March 30, with intra-month peaks above $110. India's crude basket reached $117.09 on March 20, well above the RBI's modeled $70/bbl for H2 FY26. Sustained elevated crude inflates India's import bill, widens the current account deficit (Goldman projects CAD at 2% of GDP in 2026 vs 1.3% in Q3 FY26), adds to INR depreciation pressure, and risks 150bps+ of additional CPI above RBI baseline. OMCs (IOC, BPCL, HPCL) are absorbing losses rather than passing through price hikes, pressuring their margins significantly.
Goldman Sachs cut India's calendar-year 2026 GDP forecast to 5.9% (second downgrade in 11 days; pre-war estimate was 7%), raised the 2026 CPI forecast to 4.6% (from 4.2%), downgraded Indian equities from overweight to market weight, flagged a possible 50bps repo rate hike to 5.75%, and warned CAD could widen to 2% of GDP. This is the sharpest institutional repricing of India's macro outlook since the COVID shock and directly suppresses equity valuation multiples, particularly in rate-sensitive sectors. Further revisions are possible if the Hormuz situation persists.
The Indian rupee hit an all-time intra-day low of 95.24 vs USD on March 30 (Friday close 94.85, Monday close ~95.24), driven by FPI equity and debt selling exceeding $13bn in March, sustained crude import demand, and a firm dollar index above 100. The RBI intervened by restricting banks' overnight net open FX positions to $100mn to limit speculative dollar buying. RBI's forex reserves fell ~$30bn in March, of which $16bn was in foreign currency assets, reducing the buffer available for future defense. A weaker rupee amplifies imported inflation, raises corporate hedging costs, and erodes USD-denominated returns for FIIs, potentially accelerating the outflow cycle.
FII/FPI net equity outflows in March 2026 exceeded ₹60,000 Cr (~$13bn), with 18+ consecutive days of net selling and the GOI 10-year yield rising to 6.94%, its highest in one year, reflecting bond market stress alongside equity outflows. DIIs have been consistent net buyers, providing a structural floor (e.g., ₹5,867 Cr on March 24), but have not been sufficient to prevent index-level decline given the scale of foreign selling. PSU Banks, NBFCs, and financials have borne the brunt of selling. DII absorption capacity (~₹5,000-6,000 Cr/day) limits but does not prevent further downside if FII selling sustains.
The government cut excise duty on petrol and diesel by ₹10/litre to shield consumers from the crude-driven fuel price shock. State-run OMCs (IOC, BPCL, HPCL) have not raised retail prices, absorbing under-recoveries. While positive for consumers and short-term inflation containment, the excise cut widens the fiscal deficit and compresses OMC operating margins. The government's fiscal buffer is being tested simultaneously by lower revenue (excise cut) and higher subsidy burden. Budget math for FY27 may need revision if crude remains above $100.
SEBI approved the NSE's launch of Dated Brent Crude Oil (Platts) futures contracts (symbol: BRCRUDEOIL) from April 13, 2026. The cash-settled contracts (100 barrels/lot) will trade Monday–Friday 9am–11:30/11:55pm and settle at the monthly average Platts Dated Brent price converted to INR at the RBI reference rate. This gives Indian refiners, airlines, traders, and institutional investors a domestic, globally-benchmarked hedging tool, reducing reliance on overseas exchanges. Timing amid high crude volatility is opportune, though initial liquidity will need to build before it is a reliable hedging instrument.
Nifty 50 ended FY26 at 22,331, down approximately 12-13% from pre-war levels (late February 2026), and March was on track for the worst monthly performance in six years (-10.1%). India VIX surged to 27.17 on March 23, the highest since June 2024, signaling elevated near-term uncertainty. Nifty Bank and Nifty Financial Services were the worst-performing sectoral indices on March 30. Bajaj Finance, Shriram Finance, SBI, HDFC Bank, ICICI Bank, Axis Bank, and Reliance Industries were major drags. The SEBI intraday liquidity borrowing framework for AMCs and the new Income Tax law are both effective April 1, adding regulatory transition uncertainty heading into FY27.