Billionz Multi-Asset Weekly Newsletter
Rising Oil and Yields Create Fresh Headwinds for Equity Markets
Global Developments:
Crude prices jumped again this week on unfavorable geopoltical developments. Saudi Arabia has closed its East-West pipeline, a key alternative to SoH, given multiple attacks.US August CPI print came in line with expectations. Focus next week will be on the Fed rate decision. Market is pricing in a 88% chance of a hike on Wednesday. Market is pricing in 2 hikes till end of 2026. US 10y yield moved close to the psychological 5% mark. US Federal budget deficit reached USD 1.97tn, one of the highest on record. This move cane despite Treasury Secretary Bessent warning traders betting against US treasuries
Global Equity Markets:
Domestic Equities
- Nifty50 trades at 19.9x trailing and 16.5x forward PE, while Midcap100 and Smallcap250 command higher valuations at 29.1x/26x and 28.7x/25x respectively.
- Midcap and Smallcap valuations remain at a significant premium to Nifty50, highlighting higher expectations already priced into broader markets.
- India VIX increased to 12.29 from 11.8 last week.
- 374 stocks in NSE500 are currently above their 200 day moving average
- FPIs have pulled out net USD 1.4bn from domestic equities in September so far
- Pine Labs (+21.5%), Finolex Cables (+16.7%) and Graphite India (+12.6%) emerged as the top-performing stocks, delivering strong gains during the period.
- IFCI (-18.8%), New India Assurance (-13.7%) and Zee Entertainment (-13.4%) recorded notable declines, emerging among the key underperformers.
Below are the graphical representations for how key benchmark indices performed this week & how sectoral indices performed this week:
Fixed Income
Global Rates:
- Global 10Y bond yields rose sharply, with US yields up 18bps, UK 17bps, Germany and Switzerland 12bps, and Japan 7bps, reflecting broad upward pressure on developed-market rates.
India Rates & Flows:
- The Indian 10Y benchmark yield rose to 7.02% from 6.97%, while FPIs recorded net outflows of USD 450mn from domestic bonds in September so far; banking liquidity remains in surplus above ₹10 lakh crore.
Real Estate
- Nexus Select Trust approved the ₹1,600 crore acquisition of Galaxy Infra Creations, adding a 516,000 sq ft mall and 164-key Hyatt Regency in Guwahati and expanding its presence into Northeast India.
- Tishman Speyer appointed Rahul Anand to lead its India business, reinforcing its focus on institutional-quality commercial real estate amid sustained demand for premium office assets.
IPOs
- The much-awaited NSE IPO is set to open on September 15, with the ₹5.26 lakh crore valuation and OFS structure making it a key event for India’s primary market.
- Multiple IPOs and new listings are scheduled alongside the NSE issue, making the week one of the busiest periods for India’s primary market.
Private Equity & Venture Capital
- Private equity and venture capital funding moderated, with 26 companies raising nearly USD 690mn versus over USD 1.4bn across 31 companies in the previous week, largely due to the absence of billion-dollar transactions.
- Infrastructure, space technology, industrials and healthcare remained active, led by Alpha Alternatives’ USD 227.6mn investment in Dilip Buildcon and Pixxel’s USD 100mn fundraise.
Commodities
Commodities saw a mixed performance this week, with WTI and Brent surging 9.5% and 8.7% to USD 100 and USD 104.7, respectively, while European natural gas gained 10.5%; metals and US natural gas declined.
What’s New in the World of Wealth Management
Two product developments this week are worth paying attention to. LIC Mutual Fund announced plans to launch a Specialised Investment Fund with a target corpus of Rs 500 crore, expected in October, a sign that SIFs are going mainstream with India’s largest insurer-backed fund house now joining early movers like Edelweiss, SBI MF, and Quant in this new category. For investors unfamiliar with SIFs, think of them as a middle ground between a regular mutual fund and a PMS. You need a minimum of Rs 10 lakh to invest, and they offer access to more sophisticated strategies like long-short positions that were previously only available to wealthy clients through Category III AIFs. BSE Index Services also launched the BSE Total Market Index this week, a new benchmark covering 98% of India’s listed market with over 1,000 stocks, designed for use in ETFs, index funds, and PMS strategies, and one of the broadest equity benchmarks ever created in India. On the regulatory side, SEBI proposed a faster dispute resolution framework this week, including a simplified process for cases involving amounts up to Rs 10 lakh and a 90-day window to file settlement applications, with settlement notices now being sent before show-cause notices.
Our Views: What we Like?
Equities: Nifty50 broke down this week and 23050 is the support to watch. If it breaks, we could potentially see a 5% further down move. A bounce above 23650 can be thought of as a short term reversal.It was a stock pickers market until now. However a combination of Brent>100 and UST 10y > 5% could trigger a macro sentiment breakdown globally to which even broader markets may not remain immune.
Fixed Income: While overnight rates were under pressure on surplus liquidity, RBI announced an OMO sale for Rs 1 lakh crs to withdraw liquidity on more durable basis. This will likely spook bond markets. We see the 10y trade a 6.90-7.15% range over next few weeks.
Commodities: We continue to believe Gold and Silver are a buy on every dip. We were positive on base metals but prefer to remain on sidelines fearing broad based risk aversion.
FX: Broad Dollar continued to remain in range. We expect EUR/USD to trade a 1.1330-1.1680 range. We see a 94.40-97 range for Rupee over the next 3 months.
