Stock market analysis and stories by Anagh Keremutt

Articles by Anagh Keremutt

21 Oct 2026, 05:14PM

The rupee’s slide: costly for the RBI, confusing for earnings

The rupee rebounded to a six-week high on October 21, helped by foreign currency inflows linked to the Jio IPO. But it is still down 5.2% against the dollar this year, and the slide has created two problems: a growing burden for the RBI and an uneven earnings impact for Indian companies.

Costlier crude and foreign selling have kept demand for dollars high, prompting the RBI to sell dollars from its reserves to support the rupee. That can help contain volatility, but it also drains the regulator’s reserves. The weaker currency is boosting exporters’ revenue while raising costs for companies that depend on imports.

Nuvama said higher prices and the weaker rupee drove the jump in exporters’ revenue in Q1FY27. “But some of these tailwinds will start to fade in H2FY27,” it added.

In this edition of Chart of the Week, we look at why the rupee keeps falling, what it’s costing the RBI, and how it’s showing up in company results.

The usual suspects: oil, foreign investors and the Fed

The rupee is heading for a third straight yearly fall, and this year it’s trailing most major currencies.

In 2024, it lost just 2.8% against the US dollar, while the yen and the Brazilian real fell much more. Last year, almost every major currency gained against the dollar, but the rupee fell 4.8%. This year, it’s among the worst performers, even as the Chinese yuan, the Australian dollar and the real have gained.

What’s behind it? Oil, for a start. India imports nearly 90% of its crude and pays for it in dollars. After the West Asia conflict broke out in late February, Brent crude averaged $114 a barrel in September, about 80% more than in December 2025. A higher oil bill means India has to buy more dollars, which weighs on the rupee.

Foreign investors are adding to the pressure. They’ve pulled roughly Rs 3 lakh crore out of Indian shares this year, nearly double what they took out in all of 2025. Each time they sell, they swap rupees for dollars, adding to the rupee’s slide.

And a weaker rupee gives them one more reason to go. Over the past year, the Nifty 50 has fallen about 11% in rupees. For a foreign investor counting in dollars, the loss is closer to 18%.

The US Fed is drawing money away too. It raised its key rate by a quarter percentage point in September and hinted at another hike. When safe US assets pay more, money flows out of riskier markets like India, and the rupee takes the hit.

The RBI raised rates too, on October 7. But markets had seen it coming, and the rupee still fell 0.4% that day. “The central bank should have been more hawkish to ease the pressure on the currency,” said Carl Vermassen, a portfolio manager at Zurich-based Vontobel.

So what else can the RBI do?

The RBI’s shrinking war chest

The RBI says it steps in “to curb excessive volatility”, not to defend any particular level. Yet, the scale of its spending suggests a more interventionist approach than its stated policy might imply.

To slow the rupee’s fall, the RBI has been selling dollars from its reserves, and fast. It sells those dollars on the open market, which increases their supply and props up the rupee. Reserves fell about 6.5% in the four weeks to October 2, the steepest drop since the RBI started publishing weekly data in 1998. And it kept going: IDFC First Bank’s Gaura Sengupta estimates the RBI sold nearly $10 billion in the following week alone.

A big chunk of what’s left is already spoken for. The RBI raised about $144 billion through a special scheme, mostly from deposits by Indians living abroad, and must repay it in three to five years. It has reportedly used about half of it already.

On October 10, the RBI went a step further. It set up a special dollar window for Indian Oil, BPCL and HPCL. These oil companies need dollars daily to pay for crude imports, and buying them in the open market adds to the pressure on the rupee. Now the RBI supplies those dollars directly from its reserves, keeping that demand out of the open market.

So the RBI is spending on two fronts. It still sells dollars in the market when the rupee swings too far, and it now also covers the oil companies’ daily needs.

It also tackled a problem that was speeding up the fall. As the rupee slid, exporters held on to their dollars, hoping for a better rate later. Importers rushed to buy dollars early, before they got even costlier. That meant fewer dollars on sale and more people wanting them, which pushed the rupee down faster. So the RBI tightened the rules on buying dollars in advance, making it harder and costlier to bet on a weaker rupee.

The measures seem to have helped, for now. On October 9, the rupee came close to its record low of 96.96. A week later, it had gained about 2%, its best week in seven months. Relatively cheaper oil helped too. So did Finance Minister Nirmala Sitharaman’s comment that the government was open to hearing suggestions on scrapping the long-term capital gains tax. That raised hopes that foreign investors would return, easing pressure on the rupee.

But the curbs come at a cost. Importers who lock in exchange rates to protect themselves now pay more for it. Locking in a rate for a year has been the most expensive since January 2022, so many are sticking to three months or less. It’s one of many ways the rupee’s slide is showing up in company books.

Who gains and who pays

A weaker rupee affects companies in three ways: through what they earn, what they buy, and what they owe in dollars. In Q1, a dollar cost over 10% more in rupees than a year earlier.

Every dollar exporters earn, becomes more in rupees, so a weaker rupee always boosts their sales. But that lift can also hide what’s happening to the business. Sun Pharma, for instance, saw its US sales fall nearly 10% in dollars in Q1. But because each dollar was worth more in rupees, its US sales looked almost flat in its results, masking the decline.

Bajaj Auto’s case is different. It sold 54% more vehicles abroad in Q1. Exports account for 40-45% of its business, so the extra rupees per dollar helped offset a jump in raw material costs. EBITDA margin rose 110 basis points to roughly 21%, which CFO Dinesh Thapar said was “primarily driven by favourable currency movements and improved operating leverage.”

Importers feel the opposite. Kaynes Technology’s EBITDA margin fell by more than 1 percentage point in Q1 even as revenue grew by 40%. The company said a weaker rupee and rising import costs make machinery, spare parts and technology bought from abroad more expensive.

Then there are companies that owe in dollars. IndiGo pays for its leased aircraft in dollars, so a weaker rupee pushes up its costs. In Q1, it reported a loss of Rs 238 crore. Without the currency hit, it would have lost just Rs 5.6 crore.

The pressures behind the rupee’s slide haven’t gone away, and the RBI’s dollars aren’t unlimited. So this earnings season, look past the rupee figures. A weak rupee can lift one company’s numbers without improving its business, while hurting another through higher import costs.

The Baseline

14 Oct 2026

FPIs turn net buyers in Q2, but September selling raises caution

By Anagh Keremutt

Foreign investors (FPIs) turned net buyers of Indian stocks in Q2FY27 after four consecutive quarters of selling. However, the recovery weakened as they resumed selling in September. FPIs bought about Rs 14,000 crore in equities in Q2FY27 after selling roughly Rs 1.4 lakh crore in Q1. Foreign buying also spread to 15 sectors, up from six in Q1.

V.K. Vijayakumar, chief investment strategist at Geojit Investments, linked FPI buying in August to a stable rupee, improving earnings growth in India and investors moving away from expensive global chip stocks.

FPIs reversed Q1’s selling across consumer services, healthcare, IT and metals with net buying in Q2.

Consumer durables and services also drew inflows. Selling in financial services slowed alongside auto, FMCG and oil & gas, while telecom saw the biggest outflows.

In this edition of Chart of the Week, we examine what brought FPIs back to more sectors in Q2 and where selling persisted.

FPIs back consumer businesses, services and healthcare

Demand improved across different parts of the economy. Consumers spent more on appliances, shopping and travel, while ports handled more cargo. Hospitals expanded capacity by adding beds to meet growing demand for healthcare.

Consumer services topped the list of inflows during Q2. FPIs bought over Rs 20,950 crore worth of equities in this group, reversing the Rs 8,500 crore of selling seen in Q1. The sector spans retail, online shopping, hotels and restaurants among other businesses.

Kumar Rajagopalan, CEO of the Retailers Association of India, noted a rebound since July. Annual retail sales growth recovered from 5% in May to 10% in August.

Strong travel demand helped hotels charge higher room rates, particularly at popular leisure destinations. ICRA expects demand for premium hotels to grow 8-9% annually through FY28, faster than room additions of 5-6%. “Room rates at high-demand leisure hotels are roughly 8-10% above last year, with higher increases possible on peak dates,” said Nikhil Sharma, MD & COO at Radisson Hotel.

FPIs also bet on consumption through other businesses. Consumer durables, which include jewellery, watches, paints, footwear and home products alongside appliances, saw inflows of Rs 9,300 crore in Q2.

Keshav Lahoti, research analyst at HDFC Securities, highlighted healthy demand for kitchen appliances and cooling products in Q2 even as costs rose. CII and BCG expect the appliance and electronics market to grow 8-10% annually through 2030, helped by rising incomes, easier financing and more households buying appliances.

Branded jewellery chains have an opportunity to gain market share from smaller shops as they expand their store networks. Jefferies estimates that 60% of the market remains unorganised, giving Kalyan Jewellers and Titan space to expand.

The broader services sector attracted about Rs 6,500 crore of inflows in Q2, down from Rs 9,100 crore in Q1. Higher cargo volumes supported ports and logistics. The category also includes consulting and outsourced office work.

FPIs bought about Rs 15,800 crore in healthcare stocks in Q2 after selling around Rs 9,800 crore in Q1. ICRA forecasts 13-15% revenue growth for its hospital sample this year as hospitals add beds and treat more patients. It also expects organised diagnostics revenue to rise 12-14%, supported by health packages, preventive checks and speciality tests.

Beyond hospitals and diagnostics, Sunny Agrawal, head of fundamental research at SBI Securities, sees opportunities in medicines, outsourced drug research and manufacturing, and newer obesity treatments.

Sector fortunes diverge as IT and metals regain favour

FPIs bought IT, metals and chemicals, while housing drew smaller bets. Telecom faced the impact of delayed price hikes, while capital goods and power shares needed stronger profits to justify their prices.

The IT sector drew inflows of about Rs 6,500 crore in Q2 after FPIs sold Rs 13,600 crore in Q1. Investors grew wary of expensive global AI and chip stocks, making Indian IT services firms an attractive option after their earlier sharp fall. “IT majors are now seen as the primary execution partners required in upgrading clients’ older systems, managing data and deploying AI at scale,” said Sunil Subramaniam, founder and CEO of Sense and Simplicity.

FPIs bought about Rs 3,700 crore in metals & mining in Q2 after selling in Q1. Aluminium, copper and zinc producers had a stronger earnings outlook as prices rose. Girishkumar Kadam, senior vice-president at ICRA, linked the outlook to higher prices and demand from infrastructure, power and electric vehicles.

Chemicals also attracted inflows of Rs 1,370 crore in Q2.

Housing and infrastructure activity supported builders and cement makers. ICRA noted that cement production rose 10.3% YoY in April-August.

FPIs bought a net Rs 1,300 crore in construction materials and about Rs 450 crore in realty during Q2, reversing Q1 selling in both sectors. Construction attracted just Rs 150 crore, with buying slowing from Q1.

Telecom saw the biggest sell-off in Q2. FPIs sold over Rs 14,100 crore worth of telecom equities during the quarter. Operators face heavy spending on 5G networks, while revenue growth has been slower than expected. Uncertainty over the next price hike within the industry and pending regulatory dues added to investor concerns.

On October 8, Airtel raised postpaid plan prices by Rs 50, though a wider industry increase is still pending.

Capital goods saw outflows of about Rs 7,100 in Q2. Companies still benefit from spending on manufacturing, power and data centres, but Sunny Agrawal of SBI Securities said some share prices already assumed much of that growth.

Power also saw selling accelerate in Q2, with outflows crossing Rs 6,600 crore. Jahol Prajapati, Equity Research analyst at SAMCO Securities, said, “AI-driven data centres are a long-term demand catalyst for India's power sector, but the market appears to be pricing in this opportunity much faster than earnings are likely to materialise.”

Selling eases in Q2, but picks up in September

FPIs remained net sellers in financial services, autos, FMCG and oil & gas in Q2, although outflows were lower than in Q1.

The decline was particularly sharp in financial services, where outflows fell from about Rs 50,600 crore in Q1 to Rs 3,350 crore in Q2. FPIs even bought Rs 10,500 crore worth of financial stocks in August, before turning sellers again in September.

Higher US bond yields, the Fed's September 16 rate hike and concerns over another Indian rate increase weighed on foreign investor sentiment. Vishad Turakhia, CEO at Equirus Securities, said, “Financials, which account for a large share of foreign portfolios, tend to see significant selling when overseas investors reduce their India exposure.”

Oil & gas stocks saw outflows of about Rs 8,900 crore in Q2 as volatile crude prices clouded earnings.

FPIs cut their selling in autos and FMCG as sales improved, but remained net sellers. Q2 outflows fell to about Rs 7,700 crore in autos and Rs 5,500 crore in FMCG.

Vehicle retail sales rose 31.8% from a year earlier in September, although FADA cautioned that delayed purchases a year earlier inflated the comparison. Bizom recorded FMCG sales growth of 8.6% in Q2, up from 6.8% in Q1, helped by rural spending and price increases. Higher household bills and costlier loans could still curb spending.

September’s sell-off exposed how fragile the Q2 recovery remains. Sustained inflows will depend on companies turning stronger sales into profits despite rising costs and interest rates, and Indian stocks offering enough upside to compete with US bonds.

The Baseline

08 Oct 2026

From power equipment to platforms: Where analysts see the strongest Q2FY27 revenue growth

By Anagh Keremutt

The expected rate hike is here. The RBI has raised its benchmark rate by 25 basis points to 5.50%, its first increase in nearly four years, as higher oil prices add to inflationary pressures.

The rate hike is likely to raise borrowing costs for companies, while expensive oil could add to input costs. But analysts still see opportunities in select industries. Feroze Azeez, Joint CEO at Anand Rathi Wealth, said, “Margins in capital goods, infrastructure and manufacturing are likely to remain stable, supported by healthy order books, capacity utilisation and operating leverage.” He added that earnings growth in banking and finance companies would be driven by strong loan growth rather than by margin expansion.

Power and defence orders are supporting manufacturers. IT companies are gaining from AI spending and new software deals, while online platforms are seeing higher order values. Hospitals are expanding capacity, while US healthcare providers are outsourcing more administrative work to companies such as Inventurus.

Analysts also see healthy revenue growth across realty, auto, jewellery and lending.

In this edition of Chart of the Week, we look at the companies with the strongest Q2FY27 revenue growth (YoY) forecasts, alongside expected EPS growth.

Power and manufacturing dominate the list

The strongest Q2 revenue growth forecasts are concentrated in power and manufacturing sectors. Electrical equipment, wires and cables, electronics, steel and other industrial companies make up much of the list.

Unmesh Sharma, Head of Institutional Equities at HDFC Securities, is positive on power equipment manufacturers. He points to years of spending on new power projects and factories keeping demand strong. “A global shortage of complex power equipment is also helping Indian manufacturers win orders and maintain pricing power,” he adds.

Hitachi Energy’s revenue growth estimate stands at nearly 50% as it starts delivering on a Rs 32,222 crore order book. Execution on large power-transmission projects is picking up, with work on Khavda-Nagpur gathering pace and Bhadla-Fatehpur starting to add sales.

Schneider Electric Infrastructure and R R Kabel also have revenue growth forecasts above 30%. Power projects and data centres are bringing orders to Schneider, while domestic cable demand and recovering exports support R R Kabel.

Defence and aircraft orders are bringing in more business too. PTC Industries has a 75% revenue growth estimate, helped by growth at Aerolloy, its subsidiary that makes specialised metals and aircraft parts. Aerolloy accounted for about 38% of the group’s total income in Q1, when its income rose more than fivefold.

Among the broader manufacturers, APL Apollo’s steel-tube sales hit a quarterly record in Q2, rising 13% from a year earlier. Analysts expect revenue to grow 33%.

PG Electroplast’s revenue is forecast to rise 37%, helped by growing washing-machine sales and new capacity. Management says customers have committed to buying more washing machines. EPS could more than triple against a weak base: profit plunged 88% in Q2FY26 as poor air-conditioner sales, higher depreciation and currency losses hit earnings.

Analysts also see strong growth outside manufacturing, particularly in IT services and online platforms.

Technology growth comes from newer pockets

AI investment is creating demand for companies that build powerful computers. Software companies are picking up new projects, while busier shopping platforms can earn more from systems they already run.

Netweb tops the list with a revenue growth forecast of 180%, as cloud providers and companies buy more of the powerful computers it designs and builds. AI systems already generated about 62% of its Q1 revenue. Its EPS growth estimate stands at 142%.

Coforge’s 59% revenue forecast reflects the impact of Encora, which it acquired in April. The unit accounted for 17% of Q1 sales despite being included for only two months. Coforge is also getting revenue from a $158 million deal that started contributing in April.

Internet retail and platform companies are turning higher sales into stronger profits. For example, Eternal has a 73% revenue growth estimate, helped by Blinkit’s store expansion and festive demand. Motilal Oswal expects Blinkit’s order value to grow about 23% from Q1. Analysts expect EPS to more than triple as Blinkit becomes more profitable and food-delivery earnings improve.

Analysts see strong growth across both beauty and fashion at Nykaa. Its latest update points to revenue growth in the high twenties, in line with analysts’ 29% estimate. Fashion is growing faster, with revenue growth estimated in the low forties. Analysts expect EPS to more than triple.

Healthcare providers expand their reach and services

Hospitals are adding capacity in India, while acquisitions and US outsourcing are driving growth for healthcare services companies. Kotak Institutional Equities sees hospital profits improving as newer hospitals fill more beds, while diagnostics growth remains supported by steady demand and better pricing.

KIMS has a revenue growth estimate of 30%, helped by its expanded Kondapur hospital and growing patient numbers at newer hospitals. Kondapur brought in Rs 45 crore in July, its first full month after expansion, against an earlier monthly level of about Rs 33 crore.

Narayana Hrudayalaya’s 74% revenue forecast includes UK sales that were absent a year earlier. The UK business accounted for about 31% of Q1 revenue. In India, neighbourhood clinics are bringing more patients into its hospitals, while complex cardiac and robotic procedures help raise income per patient.

Inventurus Knowledge Solutions’ revenue is estimated to double, with its July acquisition of TruBridge adding substantially to the business. TruBridge represents roughly 44% of the two companies’ combined annual revenue. Demand is growing in the existing business too, as US healthcare providers outsource more administrative work.

Company-specific drivers add to growth

The remaining companies do not fit one common theme. Their growth comes from project completions, consumer demand or larger lending businesses.

In realty, Godrej Properties’ revenue is forecast to more than double as it completes more projects and records sales from homes booked earlier. The company is targeting 13.5 million square feet of completions this year, about 11.5% more than FY26.

Adani Enterprises’ revenue is expected to rise 37%, helped by higher copper production and a growing airport business. Navi Mumbai airport began international operations in July, adding another source of passenger revenue. Analysts see EPS surging nearly 270%.

Maruti’s 29% revenue growth forecast reflects demand for higher-priced SUVs, with utility-vehicle sales jumping 62% in September.

Thangamayil Jewellery’s revenue is expected to surge 57%, helped by festive shopping. Sales during its three-day Aadi Perukku period in August more than doubled from a year earlier.

Gold lending supports Manappuram’s 33% revenue growth forecast as it gives out more gold loans and earns more interest income. EPS could nearly triple as subsidiary Asirvad Microfinance returns to profit.

The Baseline

30 Sep 2026

IRDAI wants to cut insurance selling costs. Who takes the hit?

By Anagh Keremutt

The Insurance Regulatory and Development Authority of India (IRDAI) wants every Indian to have adequate life, health and property insurance by 2047, and every business to have suitable cover.

To make insurance more affordable, the regulator wants insurers to spend less on selling policies and pass the savings to customers. Its September consultation paper, “Recalibrating Economics of Insurance Distribution,” proposes new limits on commissions and lower limits on insurers’ overall expenses.

Ajay Seth, Chairman of IRDAI, says, “Mis-selling is arising because upfront sales commissions are too high.” He adds that first-year commissions on new business can be as high as 40-50%, incentivising sellers to focus on making the sale rather than recommending the right product.

The proposals are not final, but they will reduce what PB Fintech and lenders such as L&T Finance earn from selling insurance.

Life insurers could save on commissions, but lower payouts may discourage sellers and hurt sales. Motor insurers may fare better because vehicle owners must still buy third-party cover.

In this edition of Chart of the Week, we look at who stands to lose and which insurers have more room to adjust.

Why IRDAI wants to change the model

When you buy an insurance policy through a distributor, the insurer pays that seller for bringing in the business. For example, PB Fintech’s Policybazaar earned about Rs 18.5 in revenue for every Rs 100 of premium customers paid through its core online insurance business in Q1FY27.

IRDAI’s concern is that these selling costs are rising much faster than the business they generate. Between FY23 and FY25, commissions and other payments to banks and other corporate agents covered by IRDAI’s life-insurance study jumped 125%, while premiums from the new policies they sold rose only 28%.

General insurance includes vehicle, health and property cover. Premiums from policies sold through brokers grew 37% during the same period, while their commissions rose 173%. Within this, motor insurance showed a wider gap: premiums rose about 34%, while commissions surged 259%.

Overall costs have risen too. Private life insurers’ commissions and running expenses increased from 16.5% of premiums in FY21 to 20.2% in FY26.

IRDAI wants to bring this spending down across the industry. For general insurers, it proposes lowering the limit from 30% of premiums to 25% within two years and 20% within five.

Life insurers would face a ceiling of 15% within two years and 12.5% within five. Those already below these levels in FY25, such as SBI Life and LIC, would face a stricter five-year ceiling of 10%.

Commission caps squeeze insurance platforms and lenders

IRDAI’s proposal dealt a sharp blow to listed insurance distributors. PB Fintech’s insurance-related businesses generated about 86% of group revenue in Q1FY27. That helps explain the stock’s 36% plunge on September 24. Turtlemint fell to its lower circuit as it earns nearly all its revenue from insurance distribution.

The proposed limits cover commissions from both new policies and renewals across life and general insurance. For a new individual health insurance policy, distribution companies would face a standard commission cap of 15% of the premium, compared with the current industry average of 24%, according to Kotak Institutional Equities.

For individual health-policy renewals, distribution companies would face a commission cap of 5%. Jefferies estimates that current commissions are about 15% for policies covering non-senior citizens. A company earning that rate would lose two-thirds of its renewal fee if the cap takes effect.

Limits for life insurance vary by policy. For individual term policies paid for over several years, IRDAI proposes capping distribution companies’ commissions at 25% of the first-year premium and 7.5% of later premiums. A term life policy, for instance, pays out if the insured person dies during the period of cover

Yashish Dahiya, Chairman & Group CEO of PB Fintech, said, “Life insurance should see limited impact, but general insurance revenue could shrink to about one-third to 40% of current levels. We may then need to spend less on marketing, sales and customer support.” The company also said it is still unclear whether the new limits would apply to policies already sold.

Lenders face a sharper cut in commissions from life insurance sold with loans. For policies paid for in full upfront, IRDAI proposes capping the lender’s commission at 2% of the premium, compared with the current average of 22%.

L&T Finance, Bajaj Finance and Cholamandalam Investment & Finance, among others, fell sharply amid the sell-off. According to SOIC, L&T Finance earned insurance commissions worth 25.6% of its FY26 pre-tax profit, compared with 17.8% at Poonawalla Fincorp and 16.3% at Cholamandalam.

Those commissions are income for lenders and distributors, but a cost for insurers. So does a smaller commission bill make insurers the clear winners?

Lower commissions don’t guarantee bigger profits

Lower commissions could improve insurers’ margins, but distributors may have less incentive to sell policies, which could hurt sales.

Krishnan Ramachandran, MD & CEO of Niva Bupa, calls the proposals a “net positive”. He expects lower commissions to help the insurer keep health premiums affordable for longer, supporting demand while improving its own economics. “We are in a comfortable situation to bring our expenses within the proposed 25% limit over the next two years,” he added.

But the benefit may not be equal across insurers. KG Krishnamoorthy Rao, MD & CEO of Generali Central Insurance, says smaller insurers still have to bear many of the same technology, compliance and staffing costs as larger rivals. That makes the proposed expense limits harder for them to meet as a share of a smaller premium base.

Demand for motor insurance could hold up even if distributors earn less. Vehicle owners still have to buy third-party cover, which pays for injury or damage caused to others.

IRDAI proposes zero commission for distribution companies selling this cover with new vehicles. With compulsory cover supporting demand, motor insurers could save on selling costs. ICICI Lombard and Go Digit rose amid the September 24 sell-off on expectations of these savings.

For life insurers, greater reliance on banks, agents and other sellers does not always mean higher costs. Some already spend a smaller share of premiums than their peers, which could leave them with less to change under the proposed limits.

SBI Life, for instance, generated about 85% of its premiums from new individual policies through these sellers in FY26. But it spent just 10.6% of total premiums on commissions and running expenses.

HDFC Life and Axis Max Life (majority-owned by Max Financial Services) relied less on these sellers, but spent about 21–25% of premiums on these costs, roughly twice SBI Life’s 10.6%. LIC kept costs low too, at 11.9% of premiums, compared with about 18% at ICICI Prudential Life.

If these proposals become final rules, investors should look for insurers that keep bringing in more business while reducing expenses as a share of premiums. If distributors sell fewer policies, insurers may need to find customers themselves while staying within the new spending limits.

The Baseline

23 Sep 2026

Big names, uneven returns: What drove India’s business groups over the year

By Anagh Keremutt

Lately, it feels like one Adani stock or another is turning up among the gainers. The Adani family's listed companies span power, ports, renewables, cement and other businesses, and several of its larger stocks have risen over the past year.

But how have India’s other big business groups fared? Lalit Kumar, Fund Manager at ICICI Prudential Mutual Fund, says large promoter-led groups benefit from “deep balance sheets, lower borrowing costs, and access to multiple growth engines.”

Most of these groups have businesses spread across multiple industries, which usually helps reduce risk. But that diversification does not always show up in stock returns. A few big companies can still end up deciding how the whole group performs.

For this analysis, we give bigger listed companies more weight based on their market value. And the results tell very different stories. Adani Group’s gains were largely broad-based, while IndusInd Bank and Ashok Leyland drove most of Hinduja’s return.

Even as most listed companies within Bajaj and Murugappa fell, both groups still posted positive returns as a few large stocks outweighed the declines elsewhere. Tata and Mahindra lost ground mainly because of their largest companies, while Reliance and Godrej saw all their group stocks decline.

Sector mix played a part too. Groups with greater exposure to power, steel and financials generally fared better, while IT, consumer and real estate businesses weighed on others.

In this edition of Chart of the Week, we look at how India’s major business groups performed over the past year and which companies drove those returns.

Group leaders drive gains, but breadth varies

The best-performing groups saw very different levels of participation across their listed companies. Adani drew support from several large companies, Hinduja leaned on two flagship names, while a handful of stocks drove much of the upside at Aditya Birla and Jindal.

Adani’s listed companies rose nearly 36% on a market-cap-weighted basis, with gains spread across its larger names. Its median stock gained roughly 17%, while Ambuja Cements was the main laggard.

Power generation and transmission drove much of the upside. Adani Power alone contributed around 15 percentage points to the group return. By Q1FY27, it had secured long-term buyers for 56% of its planned capacity additions, while Adani Energy Solutions had transmission projects worth about Rs 71,800 crore under construction.

IndusInd Bank and Ashok Leyland drove most of Hinduja Group’s 22% gain. Together, they account for about 95% of the group’s listed market capitalisation.

IndusInd Bank’s shares recovered from their sharp March 2025 fall, which followed discrepancies in its derivatives book. In Q1FY27, loans grew 3% sequentially, marking their first increase after six straight quarters of contraction. Ashok Leyland also gained as truck and light-commercial-vehicle demand stayed strong, while the company held a 34% share of India’s bus market.

Aditya Birla Group rose 20%, even though half of its 14 listed companies fell over the year. Vodafone Idea, Hindalco, AB Capital and Grasim drove much of the gain. UltraTech Cement, its largest listed company, declined and knocked off 4 percentage points from the group’s overall return.

Vodafone alone added 12 percentage points to the group gain. The Indian government reduced its long-pending telecom dues by 27% and postponed most repayments, easing a major financial burden. In Q1FY27, the company posted its first quarterly net subscriber additions since the 2018 merger.

The Jindal Group relied heavily on JSW Steel, which contributed around 6.2 percentage points to the group’s 7.8% return. Jindal Steel also supported the gains.

India’s curbs on cheaper steel imports helped domestic producers, with the government introducing a three-year safeguard duty in December 2025. The government also imposed anti-dumping duties on some steel products from China and Vietnam, supporting domestic pricing. In Q1FY27, JSW Steel more than doubled its profit YoY as higher steel prices and record first-quarter sales boosted margins.

Few winners keep group returns afloat

Positive group returns masked much weaker performance underneath. For example, Bajaj and Murugappa posted positive returns even as most of their companies fell over the past year.

Only two of Bajaj Group’s 11 listed companies gained over the year. Bajaj Auto drove much of the group’s 1.2% return, led by its exports, which jumped 54% in Q1FY27. Bajaj Finance was the only other stock in the green, while the group’s median stock fell 19%.

Murugappa Group gained 2.5% even as its median stock fell nearly 13%. CG Power and Cholamandalam Investment, which together account for about 62% of the group's listed market capitalisation, helped keep the overall return positive.

Demand for power equipment helped CG Power build a much larger order pipeline, with its power systems order backlog rising 59% YoY in Q1FY27. Cholamandalam Investment also rose 10.8% over the past year.

Heavyweights sink some groups, broad declines hit others

The weaker groups fell for different reasons. The losses were concentrated at Tata and Mahindra, but spread across the board at Reliance and Godrej.

Tata Group slipped 4%, with TCS largely driving the losses. The stock plunged 33% as Indian IT faced weaker client spending and worries over how AI could reshape outsourcing. Titan partly offset the impact, rising 42%.

Tata’s return needs some context. Tata Motors split its passenger and commercial vehicle businesses during the year. The latter listed separately only in November 2025, making its 1-year return less comparable with the rest. The RBI also rejected Tata Sons’ request to give up its non-bank lender registration, raising expectations of a future listing. Tata Chemicals, Tata Motors and other group stocks briefly rallied on the news before giving up much of those gains.

Mahindra & Mahindra played a similar role, driving much of the Mahindra group’s 8.5% decline. The stock fell over 15% as higher input costs and rising inventories weighed on the auto business. Its operating margin contracted 1.8 percentage points to 7.1% in Q1FY27.

Reliance Group dropped 13.5%, with all ten listed companies ending the year in the red. Reliance Industries was the main drag and accounts for over 90% of the group’s listed market capitalisation. The smaller stocks saw a sharper decline, with the group’s median return falling over 30%.

Vaqarjaved Khan, analyst at Angel One says RIL’s fall reflects pressure on near-term earnings and valuations, with West Asia disruptions raising crude premiums and freight costs. “At current levels, much of the bad news appears priced in,” he added.

Godrej recorded the steepest decline during the year, falling 21% alongside a 14% drop in the group’s median return. Godrej Consumer Products was the biggest drag, weighed down by higher raw material costs due to the West Asia conflict. The stock also plunged over 11% on August 12 after CEO Sudhir Sitapati resigned unexpectedly, shortly after shareholders approved another five-year term.

Godrej Properties added to the pressure as its pre-sales growth slowed after peaking in FY25. Rising premium housing supply also slowed sales across key markets.

A group may span several businesses, but its stock-market return can still depend heavily on where most of its listed value sits.

The Baseline

17 Sep 2026

Nifty 500 slips, but analysts still see upside in power, infra, financials and healthcare

By Anagh Keremutt

The US Federal Reserve raised interest rates on September 16 for the first time since 2023 as inflation remains high, with expensive oil adding to price pressures.

US President Trump says the West Asia war is “hopefully towards the end,” but investors may not be quick to cheer. The conflict has seemed close to ending several times before, only for fighting to resume.

The Nifty 500 is down 5.3% this year, while rising inflation and high oil prices revive bets on an RBI rate hike. But analysts still see upside in select stocks, betting on capacity expansion and bigger order books in power and infrastructure companies. Financials are benefitting from resilient loan books and diversification into newer income sources, while merger savings and rising outsourcing demand in the US are supporting optimism in healthcare.

UBS Head of India Research Divya Nagarajan sees opportunities in private banks and companies that can turn orders into revenue faster. “We also like data centre proxies, large consumer stocks, and quick commerce,” she added.

In this edition of Chart of the Week, we look at stocks with the highest analyst-estimated upside that have posted positive returns over the past 6-12 months.

Power capacity and grid spending fuel growth

India is adding thermal and renewable generation capacity while expanding transmission networks, increasing demand for transformers, cables and other electrical equipment. Companies across the chain are seeing larger project pipelines, stronger order books and higher output.

Adani Energy Solutions has projects worth around Rs 71,800 crore under construction, and CEO Kandarp Patel expects to add Rs 20,000-25,000 crore in new projects each year. Analysts see over 30% upside in the stock, with IDBI Capital expecting net profit to grow 69% annually between FY27 and FY28.

Analysts also expect around 25% upside in Adani Power and Adani Green Energy, as planned capacity additions could lift power generation and earnings. Adani Power has already secured long-term buyers for 56% of its planned capacity addition, while Adani Green’s generation rose 30% YoY in Q1FY27 as new renewable projects started generating power.

Hitachi Energy is also expected to rise nearly 24%. In Q1FY27, revenue surged 69%, while net profit more than doubled.

Analysts see 28.2% upside in KEI Industries, which is gaining from power transmission spending and household demand for cables. CFO Rajeev Gupta said higher-margin dealer and distributor sales now make up 59% of revenue, up from 51% a year ago. The company is also selling more extra-high-voltage cables, which earn operating margins of around 15%, compared with roughly 10.5% for lower-voltage power cables.

GE Vernova is expected to rise 27.5%, with Nomura forecasting net profit to grow 31% annually through FY29. The company emerged as the lowest bidder for a Power Grid project that brokerages estimate is worth Rs 13,000 crore.

Analysts also forecast a 25% rise in Triveni Turbine, helped by stronger exports, while Thermax is expected to climb 23.4% on expectations of an earnings recovery.

Infrastructure spending fills order books and lifts earnings

Spending on metros, ports and data centres is filling order books, while airports and industrial suppliers are earning more from existing capacity and higher-value products.

Cemindia Projects won new orders worth Rs 8,519 crore in Q1FY27, nearly three times the year-earlier amount, while analysts see 30% upside. MD Jayanta Basu expects around 25% revenue growth this year and next, supported by opportunities in ports, underground metros, tunnels and data centres.

Adani Enterprises is also scaling up its data-centre business and is expected to rise 28.7%. It has signed customers for more than 960 MW of capacity, versus the 65.4 MW currently operating. EBITDA in Q1 rose 49%, driven by its airports and copper business.

Analysts expect GMR Airports to rise 27.7%. Passenger traffic grew just 1% in Q1, but income rose 23% as Delhi earned more from airport charges, retail, cargo and advertising, while Goa benefited from the withdrawal of airline incentives. The company also reported a profit for the fourth straight quarter.

Usha Martin gets much of its demand from replacement sales. Around 80% of its wire-rope demand comes from replacing worn-out products in mines, cranes and lifts. The company is expected to rise over 25% as it sells more specialised ropes, including plastic-coated strands that fetch roughly 2-3 times the price of standard products. Q1 operating EBITDA rose 44%.

Jindal Saw and AIA Engineering are also expected to rise around 24%. Jindal has more than $1.3 billion of orders across India and Abu Dhabi, while AIA is banking on mining trials turning into repeat orders.

Financials gain from loan growth, cleaner books and new income

Banks are growing loans, reducing bad loans and improving lending margins. Lenders such as CreditAccess and IIFL Finance are seeing better repayments and faster growth, while Angel One is expanding beyond brokerage revenue.

Jammu & Kashmir Bank tops the entire list with a 51.1% upside potential. In Q1, loans grew 26.6%, while the bad-loan ratio fell 113 basis points to 2.37%. But net profit fell 12.5% as weaker margins and more money set aside for potential loan losses weighed on earnings.

Axis Bank is expected to rise 29.5% as management expects lending margins to recover from Q1 lows. The bank’s net interest margin (NIM) fell 34 basis points to 3.46% amid rate cuts and a shift towards corporate loans. Executive Director Subrat Mohanty reiterated the bank’s 3.8% target, while CFO Puneet Sharma expects stronger retail lending to help improve the loan mix.

Analysts forecast a 25.8% rise in CreditAccess Grameen as collections improve and loan stress eases. It collected nearly 99.7% of payments due in Q1, while money set aside for potential loan losses fell 63%. The loan book grew 16% and net profit jumped more than eight-fold, partly due to a weak base.

Gold loans have become IIFL Finance’s largest lending business, accounting for 51% of total loans. The portfolio more than doubled in Q1, while nearly 90% of overall lending is now secured. Money set aside for potential loan losses also fell 43%. Motilal Oswal expects net profit to grow about 44% annually through FY28, while consensus targets imply 23.5% upside.

Angel One is diversifying beyond broking into loan distribution, wealth management and asset management. The value of loans distributed through its platform more than doubled in Q1. Operating margin jumped nearly 11 percentage points to 32.7%, while net profit more than doubled as the company spent less on acquiring customers. The stock is estimated to climb 23.6% as per analysts.

Merger savings cut costs, US outsourcing boosts demand

The Aster DM-Quality Care merger gives the combined hospital network room to cut costs. Sagility, meanwhile, is gaining from rising outsourcing by US insurers and hospitals, which is increasing demand for claims and payment services.

Aster DM Quality Care is expected to rise 25.9%. Management expects the merged hospital network to save Rs 150-200 crore annually by sharing doctors, buying supplies together and combining support teams across the group. Since the merger took effect on July 1, most of those savings are yet to show up in earnings.

Analysts expect Sagility to rise 23.5% as US insurers and hospitals outsource more claims, payments and clinical work. The company already works with seven of the ten largest US health insurers and is winning more business from newer clients while expanding into additional services.

These stocks are based on Forecaster estimates from analysts, not estimates by Trendlyne. These are not buy recommendations.

The Baseline

10 Sep 2026

India’s private capex revival looks promising, but the opportunity is narrower than it seems

By Anagh Keremutt

India’s economy gave investors more to cheer about than they expected. GDP expanded 7.8% in Q1FY27, even as global uncertainty clouded the outlook.

But the bigger cheers came for something else: early signs of a revival in private capex. Overall investment across the economy grew 11.9%, up from last year’s 5.8%. That includes investment by households and the government, but data points to greater activity among private companies.

Bhavin Modi of Anand Rathi Institutional Equities said a few large orders partly explained private customers’ growing share of construction orders. But the trend across several construction companies suggested that “private capex is gradually broadening.” He cautioned that the revival remained at an early stage.

The value of new projects planned by private companies nearly doubled in Q1 to Rs 15.4 lakh crore, accounting for over 86% of all new projects by value. But much of the activity was concentrated in power and digital infrastructure such as data centres and cloud computing. The value of new manufacturing projects fell 40% despite resilient factory activity.

In this edition of Chart of the Week, we look at where private companies are planning to invest and which businesses are already winning orders.

Private companies step up as investment activity picks up

Companies are making bigger investment plans, borrowing more and accounting for a larger share of engineering and construction companies’ order books.

Private companies proposed new projects worth Rs 15.4 lakh crore in Q1FY27, nearly twice as much as a year earlier, while the value of new government projects fell 36%. But that doesn’t mean the government actually spent less. These numbers only show the value of projects proposed during the quarter. The actual spending could happen over several years.

Corporate borrowing is rising, with bank lending to industry growing 19.2% YoY in June, compared with 6.3% a year earlier.

Banks say companies are also borrowing more for daily business needs, while a costlier bond market is pushing some borrowers back to bank loans. HDFC Bank’s Deputy Managing Director Kaizad Bharucha said corporate demand was evenly split between daily financing needs and long-term loans during Q1. Electronics, automobiles, renewable energy and commodities were among its strongest sectors.

These investments are also showing up more clearly in companies’ order books. Private customers accounted for 40% of L&T’s domestic order book in Q1FY27, up from 27% a year earlier, with demand coming mainly from metals, buildings and factories, and a few large civil projects. CFO P. Ramakrishnan said, “We have seen a larger share of domestic orders gradually coming from the private sector over the past two years,” adding that the trend did not begin this quarter.

L&T is not alone. Between FY24 and FY26, private customers’ share of Cemindia Projects’ order book rose from 33% to 58%, while Ahluwalia Contracts saw its share increase from 35% to 61%.

Private companies are playing a bigger role, but where are they putting their money?

Concentrated bets: Who is winning?

New project announcements hit Rs 17.8 lakh crore in Q1FY27, the highest in five quarters, with private companies making up over 86% of the total. Across private and government projects, most of the planned investment was concentrated in a handful of sectors.

The value of new electricity and services projects more than doubled to Rs 7.6 lakh crore and Rs 7.8 lakh crore, respectively. IT alone accounted for around 83% of the services total, with the value of new projects nearly quadrupling. Madan Sabnavis, chief economist at Bank of Baroda, described private capex as “being driven by data centres and power.”

Australian data centre company AirTrunk plans to invest more than Rs 3 lakh crore in India by 2030. Building computing capacity often creates demand beyond servers, especially for power. For example, Meta is leasing Reliance’s AI data centre in Jamnagar and partnering with CleanMax and Fourth Partner Energy for nearly 1 GW of renewable energy.

Power investment also goes beyond supplying data centres. Tata Power spent Rs 5,375 crore in Q1FY27, its highest quarterly capex, on renewables, pumped hydro storage, transmission projects and manufacturing expansion.

So who is winning orders as power and data centre projects ramp up?

ABB India’s order intake jumped 50% in April-June 2026. Electrification orders surged 77% and made up over half of the total. The company said demand was led by data centres, metals and mining, buildings and infrastructure, and cement.

Excluding last year’s large Mumbai-Ahmedabad high-speed rail order, Siemens’ order inflows rose 44%. Grid upgrades, data centres and commercial real estate drove infrastructure demand.

Data-centre projects are also bringing orders for backup power and grid connections. Kirloskar Oil Engines won a 192-MW order from HyperNext for backup-power systems to support large AI and cloud data centres. Bajel Projects, meanwhile, won a Rs 300-400 crore order from a Mumbai data-centre customer to build a high-voltage substation.

The value of new manufacturing projects, however, fell 40%, driven by lower investments in food products, textiles, chemicals and construction materials. The construction sector saw a steeper drop, with investment values falling over 63%.

Factory output is still growing, even as companies hold back on new projects. Manufacturing activity grew 9.2% in Q1FY27, while a FICCI survey estimated factory utilisation at around 72%.

Most metals, electrical and electronics companies surveyed planned to add capacity. But most companies in the automobile, textile and chemical sectors weren’t planning to expand anytime soon. Manufacturers are worried about demand, trade restrictions and higher transportation costs, with the West Asia war adding to the uncertainty.

The early signs of a private capex revival are encouraging, but much of the activity centres on power and data centres. For investors, the key is to see which companies can keep winning orders and whether investment spreads across more industries.

The Baseline

03 Sep 2026

India’s gold-loan rush: Bigger books, tighter margins

By Anagh Keremutt

“Avoid buying gold if it’s not necessary,” Prime Minister Narendra Modi reiterated on September 1. Urging Indians to renew their pledge for an Atmanirbhar Bharat, Modi took to Instagram to appeal to citizens to support local products.

Lenders, meanwhile, are tapping the gold sitting in Indian households. Tata Capital and Godrej Capital have entered or expanded into gold-loan lending through acquisitions. Aditya Birla Capital joined the frenzy, with plans to open 200-300 gold-loan branches by March 2027 and build a network of around 1,000 branches over the next three years.

Banks and non-banking financial companies (NBFCs) are expanding aggressively into the segment as gold loans typically carry higher lending rates with lower losses. The pledged gold is also easy to value and sell if a borrower fails to repay.

But the growing competition is forcing established players to cut rates, while volatile gold prices are reducing the protection behind their loans. Siddharth Goel, Director of Asia-Pacific Financial Institutions at Fitch Ratings, said, “We do not see an immediate risk to lenders from the recent decline in gold prices.” However, he warned that another 15-20% fall could test lenders’ ability to contain losses, particularly if small businesses relying on these loans also struggle to repay.

In this edition of Chart of the Week, we look at why gold loans are booming and whether lenders can turn that growth into higher profits.

Why lenders want a piece of the gold-loan boom

A combination of rapid growth, low defaults and attractive interest rates is enticing lenders to the gold loan segment. In FY26, outstanding gold loans grew 50.4%, outpacing the 19.7% growth in loans to small business owners, 13.9% in personal auto loans and 9.4% in home loans.

Rising gold prices meant customers could borrow more against the same amount of gold. For example, Muthoot Finance's gold-loan AUM rose 44% YoY in Q1FY27 even as tonnes of pledged gold declined and customer growth was modest. Manappuram's gold-loan AUM nearly doubled over the same period as pledged gold also rose 18%.

Gold loans also saw fewer repayment delays. In FY26, just 1.2% of outstanding gold loans were overdue for one to six months, versus 2.1–3.3% for home, auto and small-business loans.

Even when borrowers fall behind, final losses tend to remain low because lenders can sell the pledged gold more easily than a house or repossessed vehicle. CRISIL says credit costs for gold-loan NBFCs, which cover provisions and loan losses, have stayed below 1% over the past five years.

Gold loans can also offer higher yields than some other secured products. IIFL Finance and Capri Global, for instance, reported gold-loan yields of around 18.6% in Q1FY27, compared with 10.5% to 16.8% from their housing and secured MSME portfolios.

Competition takes the shine off margins

Banks held around 78% of the organised gold-loan market at the end of FY26, although this includes large agricultural and other non-retail gold loans. Muthoot and Manappuram are leaders in the NBFC retail segment, but newer NBFCs are eating into their share, forcing them to offer lower rates to entice customers.

NBFCs increased their share of the overall organised market from 18% to 22% over the past two years. But that growth is being spread across more players: the four largest gold-loan NBFCs’ combined share fell from around 90% to 70% over the past four years. Among others, Tata Capital, Godrej Capital and Aditya Birla Capital have expanded into gold loans.

Motilal Oswal expects this shift to persist. “Going forward, we expect large private banks and diversified NBFCs to scale up their gold loan operations and network, while gold-loan NBFCs cede some market share,” it said.

Banks have access to cheaper funding through customer deposits, allowing them to offer lower interest rates. For instance, SBI’s gold-loan rates average about 9.6%, depending on the repayment plan. In comparison, Muthoot and Manappuram charge around 16.3% and 16.6%, respectively, depending on the loan scheme and interest-payment frequency.

So why opt for the costlier alternative? NBFCs cater more to smaller borrowers, offering faster processing, flexible repayment and easier access, especially in rural and semi-urban areas.

The impact of growing competition is seen in the recent numbers. Gold loans made up about 95% of Muthoot’s loan book in Q1FY27, and the portfolio grew 6% QoQ. But both its overall yield and net interest margin fell nearly 3 percentage points as it cut rates to retain its customers, while borrowing costs rose only marginally.

Manappuram had already made a similar trade-off. After aggressive rate reductions, its gold-loan yield fell over 5 percentage points to 17.1% in FY26. Group CFO Buvanesh Tharashankar said, “We had overcorrected in terms of pricing. So in Q1, we took some actions to enhance the yield.” He added that the company expects the yield to settle around 18%.

Volatile gold tests lenders’ protection

Falling gold prices don’t directly create repayment problems. The borrower owes the same amount, but the gold backing the loan is now worth less, which raises the loan-to-value ratio (LTV). The LTV shows the amount lent against the pledged gold’s current value.

A higher LTV means lenders have less protection in case the gold’s price drops sharply. The LTV can also increase if the lender provides additional loans against the same gold. The RBI allows lenders to provide consumption gold loans of up to 75-85% of the collateral value. Lenders must stay within that limit throughout the life of the loan.

Between Q4FY26 and Q1FY27, that cushion narrowed across the three listed lenders as gold prices fell over 5%. Muthoot’s implied LTV rose 5 percentage points to 64%; Manappuram’s increased 8.3 points to 65.6%; and IIFL’s climbed 7 points to 70%.

But the thinner cushion hasn’t led to large losses yet. IIFL’s gross bad-loan ratio for gold loans rose from 0.35% in Q4FY26 to 0.61% in Q1FY27. The company said that it does not auction the pledged gold immediately after a missed payment when the gold is still worth enough to cover the loan. IIFL’s losses after recoveries on defaulted gold loans have also stayed close to zero over the past 15-16 years.

The real warning sign would be if LTVs, bad loans and actual losses rose together after a sharp fall in gold prices. Lenders may then struggle to recover the full loan amount even after selling the pledged gold, forcing them to absorb the shortfall.

Analysts remain optimistic, however, forecasting that the yellow metal will gain another 10% by year-end. “We expect central bank gold buying to remain a multi-year trend as countries diversify their reserves against geopolitical and financial risks,” said Lina Thomas and Daan Struyven of Goldman Sachs.

The Baseline

27 Aug 2026

From weak rains to rural spending: India’s next monsoon test

By Anagh Keremutt

India’s farmers are getting squeezed from two sides this year. The conflict in West Asia has increased energy and fertilizer costs, while a weak monsoon is raising risks for crop yields and farm incomes.

A strengthening El Niño is adding to the pressure. As of August 24, cumulative rainfall was 13% below IMD’s 50-year average for the period. July offered brief relief after a sharper deficit in June. The national figure also hides wide differences between states, with some major crop-growing regions facing steeper shortfalls.

“Deficient monsoons have had a bigger impact on food inflation than on rural demand so far,” Nomura said, cautioning that “these are still early days.”

The early sowing shock largely eased after July’s rain allowed farmers to catch up on delayed planting. The shortfall in kharif planting narrowed from 25% at the end of June to 2% by mid-August. Now the worries have shifted to crop yields. Higher irrigation costs could squeeze farm incomes, and impact rural spending even though it remains stable for now.

In this edition of Chart of the Week, we look at how India’s uneven monsoon is changing risks for crops, farm incomes and rural spending.

India’s monsoon recovery hides regional stress

India’s monsoon got a much-needed recovery in July after a rainfall deficit of 35.4% in June. But the relief was short-lived, with rainfall slipping below normal again in August. The national average masks the wide regional differences. Central India was only 1% short of normal, while the South was 21% below average and the East and Northeast saw a deficit of 27%.

These differences are sharper at the state level. Between June 4 and August 10, Bihar recorded a shortfall of 36%, while neighbouring Odisha saw a surplus of 28%. Punjab and Andhra Pradesh were each short by 35%.

Farmers’ dependence on rain varies across regions. For example, Punjab accounted for 9.6% of India’s rice output in 2024-25, but almost all of its rice fields were irrigated. That gives farmers some protection from weak rainfall, while increasing their dependence on groundwater, electricity and diesel.

Madhya Pradesh saw a 16% rainfall deficit. With less than 10% of the crop area under irrigation, weaker rains pose a bigger risk in a state that produces 35% of India’s soybean and 15% of its maize.

Nomura gives more weight to rainfall in regions that account for a larger share of each crop’s production. By that measure, jute is the most exposed, with key growing regions getting 27% less rainfall than normal. Rice and coarse cereals follow at 14% and 13%, while pulse-growing regions are 9% below normal.

The early-season sowing shock has eased. While overall kharif planting has largely recovered, rice and maize sowing are still 4% lower. Pulses and oilseeds have nearly caught up. The focus now is whether the crops in the ground get enough water to support yields as El Niño conditions strengthen.

Rising input costs eat into farm incomes

Around half of India’s farmland lacks irrigation, leaving these regions exposed during weak rainfall. Farmers turning to diesel pumps can see their costs rise as weaker rains force them to irrigate more.

Costs were already rising amid the West Asia conflict. State-run oil companies hiked diesel prices four times in May, taking the cumulative increase to about 8.6%. Farmer organisations estimate that diesel accounts for 20-25% of cultivation costs. “Any rise in diesel prices increases costs as nearly every farm activity relies on diesel-run machinery,” said Puneet Singh, a farmer from Haryana.

The conflict also raised fertilizer and raw-material costs, though the government has absorbed much of that increase to protect farmers.

In Punjab, paddy farmer Dalbir Singh stressed over dry cracks that appeared in his fields during this season. Farmers like Singh can spend up to Rs 570 every hour as they turn to diesel generators to pump water.

Rural income growth was already weakening. NABARD’s July survey showed that only 27.7% of rural households reported higher incomes from the previous year, the lowest since September 2024.

Food prices are up 5.1% since April, compared with 1.9% over the same period last year and a five-year average of 4.6%. Sugar prices are 9% higher, while rice has also become more expensive. Higher retail food prices do not necessarily mean higher farm earnings, especially when input costs are rising faster than income.

The latest increase in farm costs may not be fully visible in retail prices yet. Maximo Torero, chief economist at the United Nations Food and Agriculture Organization, says commodity-price shocks typically take three to six months to feed into retail food prices.

Rural spending holds up, for now

Higher farming costs and weaker income growth haven’t affected rural spending yet. Both tractor and 2-wheeler sales grew in strong double digits in Q1FY27. Rural households entered the kharif season with support from the previous harvest and easier access to credit.

Bajaj Asset Management notes that consecutive years of deficient rainfall generally have a greater impact on farm incomes and rural consumption than a single delayed monsoon. India’s large foodgrain stocks also provide a buffer against a sharp rise in cereal prices.

Part of this resilience comes from the previous crop cycle. Rajesh Jejurikar, CEO of M&M’s Auto and Farm Sector, said, “Rabi cash flows have been healthy, with wheat procurement improving 19%.” Labour shortages are also pushing farmers towards greater mechanisation. The company’s tractor sales rose 18% in Q1.

Escorts Kubota expects the tractor industry to grow in the mid-single digits in FY27, even after volumes rose about 19% in Q1. Management says monsoon distribution and festive demand will be key over the coming months.

Credit is also providing a cushion. Hero MotoCorp’s Chief Business Officer Ashutosh Varma said, “Our retail finance penetration rose to nearly 65% in July as access to credit improved.” He expects financing to provide further support during the festive season.

Spending on everyday goods is holding up too. Dabur Global CEO Mohit Malhotra said Nielsen data showed rural FMCG growth outpacing urban by 1.7 percentage points. While there was no immediate sign of weakness, rising inflation remained a concern.

Rural demand is holding up for now. The real test will come after the kharif harvest, when this season’s yields and farm incomes start shaping food prices and consumption.

The Baseline

20 Aug 2026

India’s IPO market: From listing gains to long-term performance

By Anagh Keremutt

India’s IPO boom has lost steam this year as geopolitical tensions and cautious investors prompted companies to rethink their listing plans. But demand for the issues that did launch remains strong, with recent mainboard IPOs drawing healthy investor interest.

Several companies deferred their listing plans, while others put their IPO plans on hold. Zepto, for instance, had planned to raise Rs 8,010 crore through an IPO but has now opted to raise an eighth of that sum privately from existing investors. The move came after domestic mutual funds pushed back on the $4-5 billion valuation Zepto was seeking.

“A slower IPO market has led to a transition period of pricing discipline. This is the beginning of the next IPO boom,” said Bharat Lahoti, President and Co-Head of Factor Investing at Edelweiss.

So, are India’s IPOs still worth betting on?

Average listing gains in mainboard IPOs fell to 8.7% in 2026 from 31.8% in 2021, even as most stocks listed this year are trading above their issue prices.

The sectors driving IPO activity offer a glimpse into where companies see growth and need fresh capital. There’s also a divergence between SME and Mainboard performance. While SME (small & medium enterprises) IPOs yield higher listing pops on average, their performance after listing leaves much to be desired. And strong demand at the IPO stage does not always translate into strong post-listing returns.

In this edition of Chart of the Week, we look at how the assessment of a ‘good’ IPO in India is evolving.

Booming sectors fuel the IPO rush

The IPO boom post pandemic has been a diversified one, with companies from sectors such as banking and finance, industrials, software, and consumer durables launching in the public markets to raise capital. In contrast, telecom, oil & gas, and media have seen fewer listings in recent years.

Each year, one or two industries tend to dominate listings. In 2024, construction & engineering firms accounted for more listings as infrastructure spending picked up. A year later, electrical-equipment companies led the pack as they raised capital to expand capacity amid rising power demand and investment in the grid.

This year, textiles has led with four IPOs so far. Recent trade agreements with the US, UK, EU, New Zealand and other markets are expected to lower tariffs on textile exports, adding to the sector’s appeal. “The India-UK FTA is likely to increase apparel and textile exports by 20-25% every year,” said Naren Goenka, chairman of Bharat Tex Trade Federation.

Textile companies started to invest heavily in new capacity as these trade agreements were getting finalised.

Alpine Texworld’s IPO shows how rising global demand is prompting textile companies to expand capacity. Its weaving units operated at over 107% of installed capacity in FY26, while the newly launched spinning unit also reached 88.5% utilisation. The company raised around Rs 126 crore through its IPO and plans to use part of the proceeds to set up a new weaving facility, increasing its fabric production capacity by 28%.

Aastha Spintex is another example. It will use 65% of its IPO proceeds to acquire Falcon Yarns for Rs 131.5 crore, more than doubling its spinning and spindle capacity.

Internet software & services has also seen three listings this year, with companies seeking capital to tap growing demand for cloud and digital infrastructure. Amagi Media Labs, for instance, will invest over 30% of its IPO proceeds in technology and cloud infrastructure.

Listing pops grab headlines, but are only half the story

Smaller issue sizes and strong subscription demand often make SME IPOs attractive to investors chasing listing gains. But data suggests that these initial pops didn’t translate into stronger performance this year.

SME IPOs listed at an average gain of 10.3%, versus 8.7% for mainboard IPOs. But only 55% of SME listings are trading above their issue price, versus 79% of mainboard listings.

Some investors chase SME IPOs for quick listing gains, giving less importance to what happens after the debut. But exiting these small issues isn’t easy. About 32% of SMEs that debuted at a premium this year ended below their opening price on listing day. Half of them also hit their lower circuit, restricting further trading that day.

With limited institutional participation, liquidity plays a key role in how easily investors can enter and exit SME stocks. Shouraya Khadgawat, lead strategist of equities at Centricity WealthTech, said, “Low trading volumes can make it harder to sell a large holding without significantly affecting the stock price.”

For instance, Defrail Technologies listed at a premium of over 28%, but hit the lower circuit on both the listing day and the following trading session. The stock now trades 4% below the issue price.

The key, however, is what happens to the business after listing. So far this year, mainboard IPOs are up 29% on average, compared with 22% for SMEs.

Omnitech Engineering listed on the mainboard at an 11% discount after its IPO was subscribed 1.14 times. The company’s borrowings had more than tripled over two years by FY25. Nearly 40% of the issue was an offer for sale by the promoter, adding to investors’ concerns.

By FY26, the company’s debt burden eased despite higher borrowings. Rather than aggressively cutting debt, Omnitech restructured its existing debt and is investing for growth. In Q1FY27, revenue rose 61% and net profit surged 5.7 times, while the company said it was expanding capacity to service its growing order book. The stock now trades 150% above its issue price.

Shadowfax Technologies followed a similar path. It listed at a 9.2% discount, but the stock has more than doubled from its issue price after profitability jumped. CEO Abhishek Bansal also raised the company’s FY27 revenue growth guidance from 27-30% to 38-40%.

A weak debut, then, does not tell the full story. The listing price reflects what investors think of the business at the time of the IPO. What matters over time is whether the business can deliver on those expectations.