The Month that was: March 2026

Indian equity markets ended the month with sharp losses, on the back of geopolitical uncertainty around the war in middle east. The benchmark indices declined significantly, with the Sensex and Nifty falling by 11.5% and 11.3%, respectively. Broader markets faced steep corrections, with mid-cap and small-cap indices declining 10.9% and 10.2%, respectively. As far as sectoral performance is concerned, Banks, Realty, and Auto emerged as the key laggards. Globally also markets saw heavy declines, led by sharp fall in South Korea, Indonesia, and Japan, highlighting broader global pressure during the month.

Investor sentiment was heavily dampened by escalating global uncertainty surrounding the West Asia conflict, which pushed Brent crude oil prices up sharply, alongside a depreciating rupee . However, key positive developments included proactive government measures, such as reducing excise duties on petrol and diesel and issuing a Natural Gas Control Order to prioritize supply. Among other events, S&P Global revised India’s FY2027 GDP growth forecast upwards to 7.1%, and IEA countries agreed to release 400 million barrels of emergency oil reserves. The US Federal Reserve kept the Federal Funds rate unchanged within the 3.5-3.75% range. On the flows front, Foreign Portfolio Investors (FPIs) sold US$ 12.1 billion, while Domestic Institutional Investors (DIIs) bought US$ 15.4 billion during the month.

Market Outlook: Looking ahead, Indian equity markets may navigate volatility stemming from ongoing geopolitical tensions in West Asia, sharp swings in crude oil prices, and currency fluctuations. However, proactive government interventions to manage fuel prices, steady GDP growth forecasts, and robust support from domestic institutional investors provide a strong foundation for the markets. Importantly, post the market correction, valuation multiples have come off significantly with Nifty50 Index trading below 10 year average multiples. The structural tailwinds, combined with potential for accelerating growth position the market well to absorb external shocks and support a potential recovery in sentiment over the medium term once tensions in West Asia subside.

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