Author: Eqwires

Indian equity markets ended the week on a strong note as investors welcomed the Reserve Bank of India’s (RBI) decision to cut policy rates. The move, aimed at supporting growth amid global uncertainties, triggered a broad-based rally across sectors, lifting benchmark indices sharply higher.

Market Performance

• Sensex surged 447 points, closing well above intraday lows, as buying momentum picked up in the second half of the session.
• Nifty 50 settled at 26,186, marking a significant recovery from recent declines and reflecting renewed investor confidence.
• Broader markets also participated in the rally, with midcap and smallcap indices posting healthy gains.

Sectoral Highlights

1. Banking & Financials:
   • Banks were the biggest beneficiaries of the RBI’s rate cut, with both PSU and private lenders rallying.
   • Lower borrowing costs are expected to boost credit demand and improve margins.
2. Real Estate & Infrastructure:
   • Rate-sensitive sectors like real estate and infrastructure saw strong buying interest.
   • Expectations of cheaper loans for housing and construction projects supported sentiment.
3. IT & Pharma:
   • Export-oriented sectors gained moderately, aided by a weaker rupee and stable global demand.
4. FMCG & Consumer Goods:
   • Defensive buying continued, with investors betting on steady consumption growth.

Key Drivers of the Rally

• RBI Rate Cut: The central bank’s decision to reduce policy rates was seen as a proactive step to support domestic growth.
• Liquidity Boost: Lower rates are expected to improve liquidity in the system, encouraging both corporate and retail spending.
• Global Cues: Asian markets traded mixed, but India outperformed on the back of strong domestic policy support.
• Investor Sentiment: The rate cut revived confidence, leading to broad-based buying across sectors.

Investor Outlook

The RBI’s move has set a positive tone for the markets, with expectations of sustained momentum in rate-sensitive sectors. Analysts believe that the policy easing will support corporate earnings in the coming quarters, while also providing relief to borrowers. However, global uncertainties and inflationary pressures remain key risks to watch.

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Conclusion

The sharp rally in Sensex and Nifty following the RBI’s rate cut highlights the importance of monetary policy in shaping investor sentiment. With rate-sensitive sectors leading the charge, the outlook for the Indian market appears constructive in the near term. Going forward, global developments, inflation trends, and corporate earnings will remain crucial in determining the sustainability of this uptrend.

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Global rating agency Fitch has revised India’s growth outlook upward, projecting the economy to expand by 7.4% in FY26, compared to its earlier estimate of 7.2%. The revision reflects stronger-than-expected domestic demand, resilient investment activity, and continued momentum in infrastructure spending.

Key Drivers Behind the Upgrade

1. Robust Domestic Consumption
   • Household spending remains strong, supported by rising incomes and urban demand.
   • Rural consumption is expected to improve further with favorable monsoon conditions and government support schemes.
2. Investment Momentum
   • Public sector infrastructure investments continue to drive growth, particularly in roads, railways, and energy.
   • Private sector capital expenditure is gradually picking up, aided by improved corporate balance sheets and credit availability.
3. Manufacturing and Services Expansion
   • The government’s push under “Make in India” and PLI schemes has boosted manufacturing output.
   • Services, especially IT and financial services, remain strong contributors to GDP growth.
4. Global Positioning
   • Despite global uncertainties, India’s relative stability and large domestic market make it a preferred investment destination.
   • Fitch noted that India’s growth trajectory is significantly higher than most major economies.

Risks and Challenges

• External Headwinds: Slowing global trade and geopolitical tensions could weigh on exports.
• Inflationary Pressures: Rising food and energy prices may challenge monetary policy.
• Fiscal Balance: Higher government spending on infrastructure and welfare programs could impact fiscal consolidation targets.

Market Implications

The upward revision in India’s growth forecast is expected to boost investor confidence. Equity markets may see renewed interest in sectors such as banking, infrastructure, and consumer goods. Bond markets could also benefit from stronger growth prospects, though inflation risks remain a concern for yields.

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Conclusion

Fitch’s upward revision of India’s FY26 growth forecast to 7.4% underscores the country’s resilience and strong domestic fundamentals. While challenges remain, India’s growth story continues to stand out globally, driven by consumption, investment, and structural reforms. For investors, this provides a favorable backdrop to explore opportunities across multiple sectors, with professional research and guidance playing a crucial role in maximizing returns.

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Indian equity markets closed on a positive note on December 4, 2025, after a volatile trading session. The benchmark indices, Sensex and Nifty, managed to break a four-day losing streak, supported by selective buying in banking, IT, and FMCG counters.

Market Performance

• Sensex closed marginally higher, recovering from intraday weakness as investors looked for value in beaten-down stocks.
• Nifty 50 also ended in the green, though gains were limited due to profit booking in metals and energy shares.
• Broader markets showed mixed trends, with midcap and smallcap indices underperforming the benchmarks.

Sectoral Highlights

• Banking & Financials: PSU banks saw mild recovery after recent declines, while private banks provided stability.
• IT Stocks: Benefited from rupee weakness, with Infosys and TCS contributing to index gains.
• FMCG: Defensive buying supported the sector amid global uncertainty.
• Metals & Energy: Witnessed selling pressure, capping overall market upside.

Key Drivers of the Session

1. Global Cues: Asian markets traded mixed as investors awaited clarity on US monetary policy.
2. Currency Movement: The rupee’s weakness against the dollar boosted IT exporters, aiding sentiment.
3. Domestic Flows: Retail and domestic institutional investors provided support, offsetting foreign outflows.
4. Volatility: Despite the positive close, intraday swings highlighted caution among traders.

Investor Sentiment

The market’s ability to snap its losing streak, even with marginal gains, reflects resilience amid global and domestic challenges. Traders remain cautious ahead of key macroeconomic data releases and the upcoming derivatives expiry later this month.

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Conclusion

The Sensex and Nifty’s marginal gains today mark a pause in the recent downtrend, underscoring the importance of selective sectoral strength. While volatility persists, the market’s resilience highlights investor confidence in India’s long-term growth story. Going forward, global cues, currency trends, and domestic policy signals will continue to shape market direction.

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Public sector bank (PSU) stocks witnessed a sharp decline on December 3, 2025, after the government clarified that there is no proposal to raise the foreign direct investment (FDI) limit in public sector banks. The announcement dampened investor sentiment, particularly among those who had been anticipating reforms that could attract greater foreign capital into the sector.

Market Reaction

• Shares of leading PSU banks, including State Bank of India, Bank of Baroda, Punjab National Bank, and Canara Bank, fell during intraday trade.
• The decline was triggered by disappointment among investors who had expected policy changes to boost foreign participation and strengthen capital inflows.
• Analysts noted that the sell-off was largely sentiment-driven, as the sector had recently seen strong momentum on expectations of reforms.

Why FDI Limit Matters

FDI in public sector banks is currently capped at 20%. Raising this limit has long been seen as a potential catalyst for:

• Capital Infusion: Allowing foreign investors to hold larger stakes could help PSU banks strengthen their balance sheets.
• Operational Efficiency: Greater foreign participation often brings improved governance and global best practices.
• Market Confidence: Higher FDI limits are viewed as a signal of reform-oriented policy, which can attract long-term investors.

The government’s denial of any such proposal has temporarily dampened hopes of structural changes in the sector.

Broader Implications

• Banking Sector Outlook: While PSU banks continue to benefit from credit growth and improving asset quality, the absence of FDI reforms may slow down their ability to raise fresh capital.
• Investor Sentiment: The announcement highlights the importance of policy clarity in driving market confidence.
• Regulatory Balance: The government may be cautious about diluting control in public sector banks, given their systemic importance.

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Conclusion

The decline in PSU bank stocks following the government’s denial of an FDI limit hike underscores the sensitivity of markets to policy signals. While fundamentals remain supportive, investor expectations of reforms play a crucial role in driving valuations. Going forward, PSU banks will need to rely on domestic capital raising and operational improvements to sustain growth, unless fresh policy initiatives are introduced.

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The Indian startup ecosystem has witnessed a surge in IPO activity over the past few years, with new-age technology companies seeking to tap public markets for growth capital. Among them, Meesho’s recent anchor allocation decision has sparked debate, exposing the growing tensions between traditional market practices and the evolving dynamics of tech-driven listings.

The Anchor Allocation Controversy

Anchor investors play a crucial role in IPOs, providing early confidence and stability before the issue opens to retail and institutional investors. Typically, anchor allocation follows a balanced approach, ensuring participation from a wide range of domestic and foreign institutions.

Meesho’s unusual and bold anchor allocation call, however, deviated from conventional norms. By prioritizing select investors and limiting participation from others, the company signaled a shift in how new-age startups view capital raising. This move has raised questions about transparency, inclusivity, and the long-term implications for investor confidence in tech IPOs.

Why This Matters

• Changing Investor Dynamics: Traditional IPOs rely heavily on broad institutional support, but tech startups often seek investors aligned with their growth vision.
• Market Volatility: Concentrated anchor allocation can amplify volatility once the stock lists, as fewer investors hold significant positions.
• Retail Participation: Retail investors may feel disadvantaged if anchor allocations appear skewed, potentially affecting subscription levels.
• Global Comparisons: Similar tensions have been observed in international tech IPOs, where unconventional allocation strategies sometimes lead to short-term instability.

Broader Implications for Tech IPOs

Meesho’s decision reflects a larger trend in India’s capital markets. New-age companies, driven by rapid growth and digital-first models, are challenging traditional frameworks. While this innovation is welcome, it also introduces risks:

• Investor Trust: Transparency in allocation is critical to maintaining trust.
• Regulatory Oversight: SEBI may need to revisit guidelines to ensure fairness in anchor allotments.
• Long-Term Stability: Sustainable IPO success depends on balanced participation across investor categories.

In navigating such complex IPO dynamics, investors benefit from professional guidance. Eqwires stands out as the Best SEBI-Registered Research Analyst in India, offering deep insights into equity markets and IPO strategies. Recognized as the Best SEBI-Registered Eqwires Research Analyst, the firm provides clarity in volatile conditions. As the Best Options Trade Provider, Eqwires delivers precision-driven strategies tailored to dynamic markets. With the Best Investment Strategies by Eqwires Research Analyst, clients gain a competitive edge in both short-term trades and long-term investments. Being the Best SEBI-Registered Company in India and the Best Stock Market Service Provider in India, Eqwires ensures professional, reliable, and result-oriented support for investors.

Conclusion

Meesho’s bold anchor allocation call is more than just a company-specific decision; it highlights the growing tensions in India’s evolving IPO landscape. As new-age tech firms continue to challenge traditional norms, investors must remain vigilant, balancing enthusiasm for innovation with caution around market practices. The future of tech IPOs will depend on how well companies, regulators, and investors adapt to these changing dynamics while ensuring fairness and stability in the capital markets.

Eqwires Research Analyst

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info@eqwires.com

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