The idea was simple: own a piece of companies such as Microsoft, Nvidia, Apple or Amazon and add another source of growth to an Indian portfolio. The practical side involved higher minimums, foreign accounts, currency conversion and additional paperwork.

That equation has started to change.

PPFAS has brought its GIFT City S&P 500 and Nasdaq 100 Fund of Funds to a lower entry point, making global exposure easier to build progressively. The minimum investment is now ₹50,000, with additional investments possible in smaller increments.

That gives Indian investors another way to build an international allocation without making a large upfront commitment.

The interesting question now is what you should actually own, how much of it belongs in your portfolio, and what happens to your returns after fees, currency movements and taxes.

📌 What we’re covering today

• Why GIFT City can simplify global investing
• S&P 500 vs Nasdaq 100 and what you're actually buying
• The costs, forex charges and conversion process
• Taxation, LRS and compliance for Indian investors
• How much global exposure can make sense in an Indian portfolio

₹50,000 changes who can invest globally

The biggest change is simple.

The entry point has come down from ₹5 lakh to ₹50,000.

That matters because global investing can now be built gradually. An investor doesn’t have to commit a large amount on day one and can add to the allocation over time.

It also makes the conversation around diversification more practical.

An Indian equity portfolio can already give you exposure to banks, IT services, automobiles, consumer businesses, infrastructure and manufacturing. But some of the world’s largest businesses sit outside the Indian market.

The S&P 500 contains 500 leading US companies across sectors. The Nasdaq 100 contains 100 large non-financial companies listed on Nasdaq, with a much heavier concentration in technology and growth businesses.

So an Indian investor can own HDFC Bank, Reliance, TCS or Larsen & Toubro domestically while gaining exposure to Nvidia, Microsoft, Apple, Amazon and Alphabet internationally.

The ₹50,000 minimum is therefore useful as an entry point. The bigger portfolio decision is deciding how much of your overall wealth should be invested outside India.

S&P 500 or Nasdaq 100?

Think of the S&P 500 as the broader US equity allocation.

The Nasdaq 100 is more concentrated, particularly around technology and large growth companies.

S&P 500
• Companies: 500
• US market-cap coverage: >80%
• Technology allocation: ~36.5%
• Dividend + buyback yield: 2.8%–3.2%
• US revenue exposure: 65%–70%

Nasdaq 100
• Companies: 100
• US market-cap coverage: >40%
• Technology allocation: ~64.75%
• Dividend + buyback yield: 1.5%–2.5%
• US revenue exposure: 50%–55%

The difference becomes particularly important during technology-led cycles.

If AI spending, cloud computing and semiconductor demand accelerate, the Nasdaq 100 can benefit strongly because roughly 65% of the index is allocated to technology.

The same concentration can amplify losses when technology stocks fall.

The S&P 500 spreads exposure across all 11 GICS sectors, including financials, healthcare, industrials, consumer businesses, energy and technology. Its historical volatility has generally been lower, around 15%–18%, compared with roughly 20%–25% for the Nasdaq 100.

The Nasdaq 100 has also experienced intra-year declines of 25%–30% during difficult periods.

That gives investors a fairly simple framework:

S&P 500: broader US exposure and a natural core global allocation.

Nasdaq 100: greater exposure to technology and growth, with larger potential swings.

You can own both, but the overlap is significant. Combining them doesn’t create two completely separate portfolios because many of the largest companies appear in both indices.

🌎 A simpler route to global exposure

For investors who want US index exposure without managing a foreign brokerage account and individual overseas securities, the PPFAS GIFT City structure offers a pooled route through S&P 500 and Nasdaq 100-linked funds.

Explore GIFT City investing with us.

Get in touch 💭

Why GIFT City changes the experience

1. Why GIFT City

A direct route can involve:

Foreign brokerage account → USD conversion → overseas investment → W-8BEN → tax reporting → managing foreign securities

The PPFAS GIFT City funds package the process into a Fund of Fund structure operating from India’s International Financial Services Centre.

The S&P 500 scheme invests approximately 99.9% in the Invesco S&P 500 UCITS ETF.

The Nasdaq 100 scheme invests approximately 99.96% in the Invesco Nasdaq-100 UCITS ETF.

Both underlying ETFs are Ireland-domiciled UCITS funds.

That structure offers a meaningful benefit: investors get exposure to US equities without directly holding US-listed securities.

• No foreign brokerage account

• No W-8BEN filing

• No direct ETF management

• Investment routed through GIFT City under LRS

• No lock-in

• No exit load

• Daily NAV

• USD-denominated investment

GIFT City essentially puts the overseas investment process into a fund structure that an Indian investor can access from India.

2. What does it cost?

S&P 500 FoF

Regular TER: 0.60%
All-in TER including underlying ETF: 0.65%

Nasdaq 100 FoF

Regular TER: 0.60%
All-in TER including underlying ETF: 0.80%

Both have:

No exit load | No lock-in

TER, or Total Expense Ratio, is the annual operating cost charged to the fund, expressed as a percentage of your investment.

For example, a 0.65% all-in expense on ₹1 lakh works out to roughly ₹650 a year, before considering market movements.

3. What happens with forex?

The investment ultimately has USD exposure, so INR/USD conversion becomes part of the process.

For the conversion, the PPFAS GIFT City onboarding process uses Glomo, which generally offers more competitive forex rates than traditional bank conversion routes.

If ₹90 gets you $1, then ₹50,000 converts to approximately $556, before applicable conversion charges.

If the rupee later moves from ₹90 to ₹95 per dollar, the same $556 becomes worth approximately ₹52,800, even before the underlying US investment changes.

So there are two moving parts:

US market performance + USD/INR movement

4. What about LRS?

Investments are routed through the Liberalised Remittance Scheme (LRS).

The report highlights that remittances above ₹10 lakh in a financial year attract 20% TCS.

TCS is a tax collection mechanism, not an additional 20% investment cost.

The amount can generally be adjusted against the investor’s final tax liability while filing the income-tax return.

This gives the reader a complete answer to Why GIFT City + Benefits + Costs + Forex + LRS in one section.

Taxation and compliance: What Indian investors need to know

For these schemes, the relevant long-term holding threshold is 24 months.

For units held for less than 24 months, the scheme’s post-tax NAV calculation uses a 30% tax rate, plus applicable surcharge and 4% cess.

Beyond 24 months, the long-term rate used in the scheme’s post-tax NAV calculation is 12.5%, plus applicable surcharge and cess.

So, on a hypothetical ₹1 lakh taxable gain, the headline tax would be:

₹30,000 at 30%
₹12,500 at 12.5%

The fund material also states that applicable taxes on portfolio income are handled at the fund level. Investors should still consider the specific tax treatment applicable when they redeem their units, since tax rules can change.

There is also the LRS, or Liberalised Remittance Scheme, under which outward remittances above ₹10 lakh in a financial year attract 20% TCS. TCS is a tax collection mechanism, not an additional final tax, and can generally be adjusted against the investor’s tax liability when filing the return.

Three numbers worth remembering

24 months | Long-term holding threshold
12.5% | Long-term rate used in the scheme’s post-tax NAV calculation
₹10 lakh | Annual LRS threshold relevant to 20% TCS

Applicable surcharge and 4% cess are additional.

What compliance does the investor have?

This is where we can make the GIFT City advantage tangible.

Foreign brokerage account
W-8BEN filing
Direct ETF management

The investment is routed through GIFT City under LRS.

So the investor’s experience is substantially more streamlined than directly buying and managing US-listed securities.

LRS still applies, so investors need to keep their total overseas remittances within the applicable regulatory framework and account for the ₹10 lakh TCS threshold.

A small “What you’re actually buying” box

S&P 500 FoF

~99.9% in Invesco S&P 500 UCITS ETF
500 companies
0.65% all-in TER
$500 minimum
No lock-in | No exit load

Nasdaq 100 FoF

~99.96% in Invesco Nasdaq-100 UCITS ETF
100 companies
0.80% all-in TER
$500 minimum
No lock-in | No exit load

How much should you actually invest?

Global exposure works best when it has a defined role in the overall portfolio.

A reference point we generally use is around 20% of the total portfolio, depending on an investor’s goals, risk tolerance and existing exposure.

For example:

₹5 lakh portfolio

Around ₹1 lakh could be allocated globally.

A possible split:

₹60,000 S&P 500
₹40,000 Nasdaq 100

₹25 lakh portfolio

Around ₹5 lakh could be allocated globally.

A possible split:

₹3 lakh S&P 500
₹2 lakh Nasdaq 100

₹1 crore portfolio

Around ₹20 lakh could be allocated globally.

At this size, the allocation can become more deliberate, with the S&P 500 providing broad US exposure and the Nasdaq 100 adding a more concentrated technology and growth component.

The 20% figure is a reference point, not a rule. An investor with significant existing international exposure, upcoming financial commitments or a lower tolerance for equity volatility may need a different allocation.

The same principle applies to the ₹50,000 minimum. It gives you access. It doesn’t mean ₹50,000 belongs in each fund.

And there is a final number worth remembering.

Historical data in the fund material shows the S&P 500 delivering average annualised returns of around 8.7% over 10-year periods, 8.7% over 5-year periods and 9.1% over 3-year periods, measured in US dollars since 1991.

Markets will produce strong years and difficult ones.

A sensible global allocation is designed to remain invested through those periods.

With the minimum now at ₹50,000, that allocation can be built progressively, alongside your Indian investments.

🌎 Take your portfolio global through GIFT City

The PPFAS GIFT City S&P 500 and Nasdaq 100 schemes offer a structured way to add international exposure alongside an Indian portfolio.

If global diversification fits your investment plan, start exploring GIFT City investing with us.

Take the first step now 🚀

And then there are years like this one, where the headline index tells only a small part of the story.

The Nifty 50 has delivered negative returns over the last year. Yet, in the screen we ran, the top 10 mutual funds delivered between 13.65% and 27.41%.

That difference is worth understanding.

We filtered for funds with more than ₹1,000 crore in AUM, at least 5 years of operating history, and strong one-year performance.

The interesting part was what came after the ranking. The funds were not all making the same bet. Small caps, infrastructure, manufacturing, transportation, PSUs and even global exposure appeared across the list.

The common thread was positioning.

When capital starts moving towards a particular part of the economy, investors exposed to that trend can experience a very different market from the one reflected by the headline index.

So today, instead of simply asking which fund delivered the highest return, let’s understand what these funds owned and why that mattered.

📌 What we’re covering today

• Why some funds outperformed despite weak index returns

• The sectors that created most of the gains

• Why small caps, manufacturing and infrastructure performed well

• What separates winning funds from average funds

• How twSpotlight+ helps identify these themes early

1. Different parts of the market delivered different returns

The top-performing fund in our screen was Bank of India Small Cap Fund, delivering 27.41%.

The 10th-ranked fund, ICICI Prudential Retirement Fund Pure Equity Plan, still delivered 13.65%.

Between them were eight very different strategies.

• Bank of India Small Cap Fund
  AUM: ₹2,572 Cr | 1-Year Return: 27.41%

• SBI Children’s Benefit Fund
  AUM: ₹6,944 Cr | 1-Year Return: 19.90%

• DSP India T.I.G.E.R. Fund
  AUM: ₹6,263 Cr | 1-Year Return: 19.51%

• ICICI Prudential Manufacturing Fund
  AUM: ₹6,842 Cr | 1-Year Return: 19.04%

• Invesco India Smallcap Fund
  AUM: ₹13,384 Cr | 1-Year Return: 18.65%

• UTI Transportation & Logistics Fund
  AUM: ₹3,962 Cr | 1-Year Return: 17.66%

• Nippon India Power & Infra Fund
  AUM: ₹8,043 Cr | 1-Year Return: 15.84%

• LIC MF Infrastructure Fund
  AUM: ₹1,137 Cr | 1-Year Return: 15.39%

• Aditya Birla Sun Life PSU Equity Fund
  AUM: ₹6,018 Cr | 1-Year Return: 14.36%

• ICICI Prudential Retirement Fund Pure Equity Plan
  AUM: ₹1,997 Cr | 1-Year Return: 13.65%

Six of the ten funds had a direct connection to infrastructure, manufacturing, transportation, power or PSUs.

Two others were small-cap funds.

That alone gives us a useful starting point.

🏗 Infrastructure

🏭 Manufacturing

📦 Transportation & Logistics

⚡ Power

🏛 PSUs

📈 Small Caps

DSP India T.I.G.E.R. Fund, for example, had 85% of its portfolio in equities, including 25.6% in small caps and 10.4% in mid caps. Its largest holdings included Reliance Industries at 6.8%, NTPC at 5.1%, Larsen & Toubro at 3.7%, Hindustan Aeronautics at 3.1% and Bharat Electronics at 2.5%.

ICICI Prudential Manufacturing Fund had 98.14% in equities, with 21.09% in capital goods and 20.87% in automobiles and auto components. Reliance Industries, Mahindra & Mahindra, Sun Pharma and Larsen & Toubro were among its largest holdings.

There was also an interesting outlier.

SBI Children’s Benefit Fund delivered 19.90% in the screen despite having a very different mandate. Its portfolio included Alphabet at 6.04%, State Bank of India at 5.06%, Thangamayil Jewellery at 5.00%, Adani Enterprises at 4.12% and Kotak Mahindra Bank at 3.74%. Its AUM was around ₹7,310 crore in the source data.

So, even within the top 10, the market rewarded several different forms of exposure.

Insight: Markets rarely move together. Strong returns often appear when capital concentrates in specific sectors, company sizes or investment themes.

2. Infrastructure, manufacturing and small caps led the gains

The first instinct when a fund delivers 20% or 25% is to credit the fund manager.

The portfolio tells us much more.

Take DSP India T.I.G.E.R. Fund. It has been around since 2004, with AUM of ₹6,324.81 crore as of July 31, 2026. Over 10 years, the fund delivered a 17.12% CAGR, compared with 12.27% for the Nifty 50 TRI. A ₹10,000 investment over that period became ₹48,666 in the fund versus ₹31,857 in the Nifty 50.

That is a sizeable difference created over time.

Nippon India Power & Infra Fund provides another example. Its regular plan delivered 21.95% CAGR over five years and 17.78% since inception, compared with 17.42% and 11.22% for the Nifty Infrastructure TRI. The fund dates back to May 2004.

Its investment approach is directly connected to India’s capital expenditure cycle, with exposure to power, infrastructure, transportation, energy and related businesses.

Manufacturing shows a similar pattern.

ICICI Prudential Manufacturing Fund had AUM of ₹7,148 crore as of July 31, 2026. Its largest sector allocations were capital goods at 21.09%, automobiles and auto components at 20.87%, chemicals at 10.73%, healthcare at 9.89% and metals and mining at 9.68%.

Then there are small caps.

Bank of India Small Cap Fund had grown from just ₹30 crore in 2018 to ₹2,819 crore by August 2026. Its portfolio contained 84 stocks, with 22.64% in industrials, 18.43% in consumer discretionary and 15.99% in financials. Three-year earnings growth stood at 21.43%.

Invesco India Smallcap Fund had an even larger AUM of ₹14,475 crore, with 19.29% in healthcare, 18.70% in consumer discretionary, 17.74% in financials and 12.44% in industrials. Its three-year earnings growth was 17.19%.

The pattern becomes clearer.

Infrastructure benefited from capital spending.

Manufacturing benefited from industrial activity.

Transportation benefited from vehicle, mobility and logistics businesses.

Small caps benefited from earnings growth across a wider set of domestic businesses.

The funds were positioned where the numbers were starting to improve.

🌟 twSpotlight+

The best-performing funds were positioned around themes where earnings were already improving.

That’s the thinking behind twSpotlight+ too: focused research, timely India and global opportunities, sector insights and long-term investing frameworks.

No stock tips. No noise. Just ideas worth understanding.

Join twSpotlight+ and see what we’re tracking next. 🚀

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3. How the top funds were positioned

The strongest funds on the list had something in common: their portfolios had a clear connection to the areas generating earnings growth.

Consider UTI Transportation & Logistics Fund.

Its five largest holdings were Mahindra & Mahindra at 12.87%, Eternal at 9.77%, Maruti Suzuki at 8.88%, Eicher Motors at 7.70% and Bajaj Auto at 6.29%.

Together, those five companies accounted for 45.51% of the portfolio.

The fund had existed for 22 years, with AUM of around ₹4,263 crore, and the source data shows 16.67% one-year returns.

The portfolio is concentrated around businesses linked to transportation, automobiles and consumer mobility.

The same concentration appears elsewhere.

Aditya Birla Sun Life PSU Equity Fund had 17.55% in State Bank of India, 7.65% in NTPC, 6.71% in Power Grid, 6.32% in BHEL and 5.12% in GAIL. The fund had AUM of ₹5,986 crore and had generated 21.37% CAGR since inception in the source data.

LIC MF Infrastructure Fund also had significant exposure to the same investment cycle. Its portfolio included 9.42% in auto components, 9.13% in automobiles, 10.54% in banks, 7.26% in power, 7.09% in industrial products and 6.20% in realty. Small caps accounted for 35.20% of its equity portfolio.

The trade-off is straightforward.

A broad index spreads money across many sectors.

A focused fund puts a larger share behind a particular theme.

When the theme works, returns can move well ahead of the index.

When it weakens, the same concentration can hurt.

That is why a fund’s return is only the starting point.

The better question is:

What had to go right for this fund to generate that return?

4. What fund performance can teach investors

The top 10 funds also show why rankings can be misleading when viewed in isolation.

The list contains a small-cap fund, a children’s fund, infrastructure funds, a manufacturing fund, a transportation fund, a PSU fund and a retirement fund.

Yet several of them benefited from a common economic backdrop: domestic investment, industrial activity and earnings growth.

The numbers make this easier to see.

DSP India T.I.G.E.R. Fund delivered 17.12% CAGR over 10 years.

Nippon India Power & Infra Fund delivered 21.95% over five years.

Bank of India Small Cap Fund’s portfolio recorded 21.43% three-year earnings growth.

ICICI Prudential Manufacturing Fund had over 41% combined exposure to capital goods and automobiles.

These are very different funds, but the underlying businesses explain a large part of their performance.

This is where a basic finance concept helps.

Earnings growth simply means a company’s profits are increasing over time. If profits grow consistently and investors continue to value those profits favourably, the company’s share price can rise and the fund holding it benefits.

That is why experienced investors spend time studying earnings, order books, capital expenditure, demand and competitive positioning.

The ranking tells you what happened.

The portfolio helps explain why it happened.

And the economic trend can help us think about what might happen next.

5. Look for the next growth theme

The top 10 funds generated between 13.65% and 27.41%.

The Nifty struggled during the same period.

The strongest recurring themes were:

🏗 Infrastructure

🏭 Manufacturing

📦 Transportation & Logistics

⚡ Power

🏛 PSUs

📈 Small Caps

But there is an interesting detail here.

SBI Children’s Benefit Fund made the second spot with 19.90%, and its portfolio included Alphabet at 6.04%. That reminds us that strong returns can also come from exposure sitting outside the obvious domestic themes.

Similarly, the retirement fund at number 10 delivered 13.65%, with AUM of around ₹2,096 crore in the source data and a 5-year lock-in or retirement-age condition.

So the real lesson isn’t to chase infrastructure or manufacturing simply because they appear frequently on this year’s leaderboard.

A theme can attract capital, deliver strong returns and eventually become expensive.

The more interesting question is what comes next.

Are earnings estimates rising?

Are companies increasing investment?

Are order books expanding?

Are capital flows moving into a sector?

Are smaller companies beginning to report stronger profits?

These signals can appear before a theme becomes the headline.

That is exactly where our work at twSpotlight+ begins.

We study sectors, businesses, macro trends and market opportunities with the aim of understanding why something matters, what is changing, and where the next opportunity could emerge.

Inside twSpotlight+, members get:

• Deep sectoral research

• Timely domestic and global opportunities

• Contra ideas when value emerges

• Macro and market explainers

• Long-term investing frameworks

• Live Q&A discussions

The objective is simple: build better judgement around opportunities instead of reacting to the leaderboard after the returns have already arrived.

The top 10 funds tell us where investors were rewarded.

The bigger opportunity is understanding where the next earnings cycle could begin.

If you want to see what we’re tracking before it shows up in the mainstream narrative 👇

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Revenue is compared. Profit is compared. Margins are compared. A few days later, attention moves to the next company.

The better approach is much simpler.

Did this quarter change the long-term investment story?

NSE’s latest results provide a useful opportunity to answer that. Not by analysing one quarter in isolation, but by understanding the business that continues producing these numbers year after year.

For investors, that distinction often matters far longer than a single earnings season.

📌 What We’re Covering Today

• What Q1 tells us beyond the headline numbers

• Why NSE continues growing despite regulatory changes

• Where the next phase of growth could come from

• Is NSE becoming a long-term quality compounder?

• What investors should watch over the next decade

Good Businesses Grow. Great Businesses Stay Strong During Change.

India’s capital markets have changed significantly over the last few years.

SEBI tightened F&O regulations. Weekly expiry formats changed. Position limits evolved. IPO timelines became stricter. Transaction costs were revised. Several of these changes directly affected trading activity.

Yet the broader ecosystem continued expanding.

NSE today serves 13.1 crore unique registered PANs, covers 99%+ of India’s pin codes, works with 1,327 trading members, and lists companies worth US$4.9 trillion in market capitalisation.

The growth in participation has been remarkable.

Back in FY20, NSE had around 4.5 crore registered investors. Today, that figure has nearly tripled to 13.1 crore. Active cash market participants have increased from 85 lakh in May 2020 to 3.57 crore in May 2026, while equity derivatives participants have grown from 15 lakh to over 1.03 crore during the same period.

That expanding investor base continues to support the business.

The Q1 FY27 numbers reflected that strength.

Revenue from operations grew 13.1% YoY to ₹4,560 crore. Profit Before Tax increased 10.4% to ₹4,169 crore, while net profit rose to ₹3,120 crore, up 6.7% YoY.

To put that into perspective, NSE generated roughly ₹34 crore of profit every day during the quarter.

Cost discipline remained equally impressive. Total expenses stood at ₹1,172 crore, almost four times lower than total income of ₹5,252 crore, resulting in a PBT margin of nearly 79%.

Very few businesses in the world consistently convert close to four-fifths of their revenue into profits.

That tells us something important.

Regulations can influence quarterly activity. Businesses built around growing participation generally continue expanding because the underlying ecosystem keeps becoming larger.

Growth Doesn’t End At Trading.

Many investors think of NSE as a platform where shares are bought and sold.

Today, it is much larger than that.

Trading Services remained the largest contributor, generating ₹4,103 crore during Q1 FY27.

Clearing Services added another ₹494 crore, while the “Others” segment reported 49% YoY growth in profit, indicating that newer businesses are steadily becoming more meaningful.

NSE today earns revenue from multiple businesses.

• Equity and derivatives trading

• Clearing and settlement

• Market data

• Nifty index licensing

• Technology platforms

• SME listings

• Bond market infrastructure

• International operations

This diversification matters because exchanges across the world gradually earn a larger share of revenue from services built around trading instead of trading activity itself.

India is still early in that transition.

New opportunities continue emerging through GIFT City, fixed-income products, institutional technology services, carbon markets, energy trading, wealth infrastructure and data analytics.

The next phase of growth may come from these businesses just as much as from higher trading volumes.

⚙️ NSE continues to be one of the most closely tracked pre-IPO opportunities in India. If you’d like to understand how pre-IPO investing works, current market pricing, or the investment process, feel free to get in touch with our team.

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Is NSE Becoming A Quality Compounder?

Most great businesses follow a similar path.

Growth.

Scale.

Market leadership.

Strong cash generation.

Long periods of compounding.

NSE increasingly fits that description.

It is India’s largest multi-asset exchange, the largest derivatives exchange globally by contracts traded, and the third-largest equity exchange globally by number of trades, according to the World Federation of Exchanges.

Its market share remains dominant.

It handles around 100% of equity futures, 100% of equity options, 100% of currency futures, 100% of currency options, and over 93% of equity cash market activity.

Market leadership creates something even more valuable.

Network effects.

Every new investor attracts brokers.

More brokers attract listed companies.

More listed companies attract institutional investors.

Higher liquidity attracts even more participants.

Over time, every additional participant makes the platform stronger for everyone already using it.

That is one reason exchanges are among the hardest businesses to replicate.

Capital efficiency strengthens the story further.

Unlike manufacturing businesses, NSE does not need to build new factories every year to support growth.

The business generated ₹3,120 crore in quarterly profits while operating with a consolidated asset base of around ₹52,355 crore. Its Core Settlement Guarantee Fund also increased to ₹13,362 crore, strengthening the stability of India’s market infrastructure.

As trading activity increases, much of the additional revenue flows through at high margins because the underlying infrastructure already exists.

That is one reason quality exchanges often become exceptional cash-generating businesses.

If Warren Buffett were analysing NSE, the questions would likely be straightforward.

Can earnings remain predictable?

Can the business continue growing without requiring large amounts of additional capital?

Can competitors realistically recreate its network?

Can management continue finding attractive opportunities to reinvest capital?

Can this business remain relevant twenty years from now?

Those questions often matter much longer than next quarter’s earnings.

Has The Long-Term Investment Case Changed?

Imagine NSE were already listed.

After reading these results, would a long-term institutional investor materially change their assumptions?

Probably not.

Most of the structural drivers remain intact.

✅ Registered investors have increased from 4.5 crore to 13.1 crore since FY20.

✅ Passive assets tracking Nifty indices now exceed US$91.2 billion globally.

✅ Companies have raised over ₹56 lakh crore through equity and debt on NSE between FY24 and FY27 (till May 2026).

✅ The exchange facilitated 267 Mainboard IPOs and 422 SME IPOs during the same period.

✅ India’s listed market capitalisation has crossed US$4.9 trillion.

✅ The Core Settlement Guarantee Fund now stands at ₹13,362 crore, providing additional resilience to the ecosystem.

Each of these numbers points in the same direction.

India’s capital markets continue becoming deeper, broader and more accessible.

Markets often react to quarterly surprises.

Long-term investors usually spend more time asking if the original investment thesis has changed.

For businesses with durable competitive advantages, that answer tends to change much more slowly than share prices.

One Quarter Ends. The Business Continues.

Quarterly earnings help us understand where a business stands today.

Long-term wealth is often created by understanding where that business could stand ten years from now.

India’s financialisation continues to gather pace.

The registered investor base has almost tripled over six years.

Passive assets tracking Nifty indices have crossed US$91 billion.

Companies have raised ₹56 lakh crore through NSE over the last three financial years.

The listed market itself is now worth US$4.9 trillion.

Every new demat account, every SIP, every IPO and every institutional investor strengthens the country’s capital market ecosystem a little further.

NSE sits at the centre of that ecosystem.

Q1 FY27 added another strong quarter to its history.

The larger investment story continues to be India’s expanding capital markets and the businesses positioned to benefit as participation keeps growing.

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InCred Holdings is entering that stage today. Founded in 2016, it has grown into a diversified financial services group with businesses across lending, wealth management, asset management, capital markets and digital investments. With an IPO expected in 2027, investors are beginning to ask a simple question.

Does today’s private market valuation fully reflect what the business could become over the next five years?

📌 What We’re Covering Today

• Why private and public market valuations can differ

• How InCred built a diversified financial platform

• The numbers supporting its growth

• Why global institutions continue backing the business

• Why the pre-IPO window attracts long-term investors

The Valuation Gap Investors Should Understand

Every listed company starts its life in private markets.

The usual path looks something like this.

Private Company → Business Scales → Institutional Investors Participate → IPO → Public Investors Gain Access

By the time a company reaches the stock market, investors can usually study several years of audited financials, analyst coverage and quarterly results. The uncertainty is lower, but so is the opportunity to participate during the early stages of growth.

Private investing works differently.

Instead of focusing only on today’s earnings, investors spend time estimating where the business could be three to five years from now. They evaluate management quality, market size, customer growth and capital allocation before those numbers become visible to everyone else.

That difference explains why many institutions participate well before a company files for an IPO.

InCred sits in exactly that position today. The company has already submitted its updated draft papers to SEBI and plans to raise ₹1,250 Cr through a fresh issue, alongside an offer for sale by existing investors.

To understand why investors are paying attention now, it helps to first understand how the business itself has been built.

One Company. Nine Businesses. One Financial Ecosystem

At first glance, InCred may appear to be another lending company.

In reality, it has gradually built a financial platform where multiple businesses support each other.

Retail Lending
↓
SME & Business Lending
↓
Housing Finance
↓
Wealth Management
↓
Asset Management
↓
Institutional & Capital Markets
↓
Alternative Investments
↓
Digital Investment Platform
↓
Global Wealth

These businesses operate through brands including InCred Finance, InCred Capital, InCred Wealth, InCred Equities, InCred Asset Management, InCred Alternatives, InCred Money, InCred Premier and InCred Global Wealth.

The benefit of this structure is fairly simple.

A customer may initially borrow a loan, later begin investing through the platform, and eventually use wealth management or capital market services as their financial needs evolve. Each additional relationship creates another source of revenue without starting from scratch.

Large banks have followed this model for years. New-age financial platforms are increasingly doing the same.

Diversification also helps reduce concentration risk. If one lending segment slows, earnings can be supported by other businesses across the platform. Investors often reward this kind of diversified model with stronger valuations because growth is supported by multiple engines instead of a single product.

Today, the group operates with 3,500+ employees, 150 branches across India and three core operating platforms serving retail, institutional and wealth clients.

Growth Is Easy. Profitable Growth Is Rare.

Growing a loan book is one thing.

Growing while maintaining profitability and keeping bad loans under control is where investors begin paying closer attention.

In FY26, InCred Finance reported ₹2,546 Cr in operating revenue, up 36% from ₹1,872 Cr a year earlier. Profit after tax increased to ₹438 Cr, a growth of 17% year-on-year.

The business generated ₹2,331 Cr of interest income, representing 91% of operating revenue. At the same time, fee and commission income contributed another ₹213 Cr, showing that revenue is gradually becoming broader than lending alone.

Rapid growth often brings higher costs.

Finance expenses increased 47% to ₹922 Cr, employee costs rose 23% to ₹416 Cr, and impairment charges, which reflect expected credit losses, increased to ₹305 Cr. Despite these investments, the company remained profitable and reported total financial assets of ₹15,243 Cr, including ₹824 Cr of cash and bank balances at the end of FY26.

That combination of growth, profitability and continued investment in the business is usually what long-term institutional investors monitor most closely.

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Why Institutions Invest Years Before The IPO

When large investment firms back a private company, the investment thesis usually extends well beyond the IPO.

The objective is to support a business that can continue compounding for many years after listing. That means studying management quality, governance standards, capital allocation and execution over long periods instead of focusing on short-term financial performance.

InCred’s shareholder base reflects that approach.

The company has attracted capital from institutions including KKR, ADIA (Abu Dhabi Investment Authority), Investcorp, Moore Strategic Ventures, Oaks Asset Management, Elevar Equity, Teacher Retirement System of Texas, MEMG and several other long-term investors. Since inception, the group has raised over $450 million in private equity funding and achieved unicorn status in 2023.

Leadership also brings significant industry experience.

Founder and Group CEO Bhupinder Singh previously led Corporate Banking and Securities for Asia Pacific at Deutsche Bank before founding InCred in 2016. The leadership team also includes senior executives with experience at Standard Chartered, ICICI Bank, HDFC Bank, McKinsey & Company, Morgan Stanley, Coca-Cola India and several other global financial institutions.

Strong governance doesn’t eliminate business risk, but it often improves decision-making as companies scale. That is one reason institutional investors tend to stay invested across multiple funding rounds instead of treating the IPO as the finish line.

The IPO May Arrive In 2027. The Opportunity Doesn’t Wait Until Then.

Every pre-IPO investment comes with uncertainty.

Financial performance can change. Competitive intensity can increase. Valuations move with market conditions, and IPO timelines can shift depending on regulation and investor sentiment.

Those risks are common across every private company.

The other side of that equation is equally important.

Once a company becomes publicly listed, access to private market pricing disappears. Investors entering after the IPO participate from a different starting point than those who invested during the private stage.

That is why experienced investors spend time evaluating businesses long before listing dates become the headline.

For InCred, the investment case extends beyond a single IPO event.

A diversified financial platform with 3,500+ employees, 150 branches, ₹15,243 Cr of financial assets, ₹2,546 Cr in FY26 operating revenue and ₹438 Cr in annual profit is already operating at meaningful scale. The next phase will depend on how effectively the company expands its lending platform, wealth management franchise and institutional businesses over the coming years.

For long-term investors, that is often the question worth spending the most time on.

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Should I wait for markets to settle? Should I invest now? Or should I hold cash until things become clearer?

There isn’t one answer that fits everyone.

The amount of capital you’re investing changes the job your portfolio has to do. Someone investing ₹10 lakh is primarily building wealth. Someone managing ₹10 crore is trying to grow wealth without taking unnecessary risks.

Today, markets are dealing with rising geopolitical tensions, volatile oil prices and uncertainty around inflation and interest rates. Yet India’s economic outlook continues to remain relatively strong.

So instead of asking what the market will do next, let’s ask a better question.

How should a portfolio be built for today’s environment?

📌 What We’re Covering Today

• Why uncertainty changes portfolio construction

• Where we’d invest ₹10 lakh today

• How ₹1 crore deserves a different strategy

• Why ₹10 crore requires institutional thinking

• The allocation we’d use in today’s market

Don’t Predict The War. Build A Portfolio That Can Handle It.

Markets have seen this before.

The Gulf War.

The Global Financial Crisis.

COVID-19.

Russia-Ukraine.

And now, renewed tensions across West Asia.

Every event feels different while it is unfolding. Yet markets have consistently shown that uncertainty eventually gives way to normalcy.

That doesn’t mean volatility disappears.

It means investors should prepare for it instead of trying to forecast every headline.

Recent events offer a good example.

Brent crude climbed sharply after concerns around energy supply resurfaced in West Asia. Gold initially rallied as investors moved towards safer assets, before correcting as higher oil prices increased expectations of inflation and interest rate hikes. Indian equities also reacted, with the Sensex falling 0.86% and the Nifty declining 0.79% on one of the major escalation days.

Yet, despite these developments, India’s medium-term outlook remains constructive.

The IMF and several domestic strategists continue to project India’s GDP growth at around 6.5%, supported by domestic demand, government spending and corporate earnings.

That distinction matters.

Headlines create short-term volatility.

Economic fundamentals drive long-term wealth creation.

A useful way to think about investing during uncertain times is to replace one question with another.

Instead of asking,

“What happens if the war gets worse?”

Ask,

“Can my portfolio still perform reasonably well if I’m wrong?”

That’s how institutions approach uncertainty.

They rarely depend on a single prediction.

They prepare for multiple outcomes.

Earlier Thinking - Better Thinking Today

Maximum returns - Maximum resilience

Concentrated bets - Diversified exposure

Predicting outcomes - Preparing for outcomes

Once you accept that uncertainty cannot be predicted consistently, portfolio construction becomes much simpler.

If You Had ₹10 Lakh Today

For many investors, ₹10 lakh represents a meaningful part of their savings.

At this stage, staying invested is often as important as earning high returns.

A portfolio that forces you to sell during volatility is usually a bigger problem than temporary market declines.

Suggested Allocation

Asset - Allocation

Safety & Liquidity - 30%

Indian Equity - 40%

Debt + Gold - 20%

Global Equity - 10%

The first 30% serves one purpose.

It gives you flexibility.

Money parked in liquid funds or emergency savings may earn around 6%, but the bigger advantage is having cash available if markets correct further. That allows investors to continue buying instead of selling at the wrong time.

The next 40% belongs in diversified Indian equity through large-cap and flexi-cap mutual funds.

Large businesses usually have stronger balance sheets, better access to capital and greater resilience during periods of economic uncertainty.

The remaining 20% can be split between short-duration debt funds and around 10% allocation to gold.

Gold has historically acted as a hedge during periods of geopolitical stress, although recent months also show that it can correct when expectations of higher interest rates strengthen. Keeping it around 10% provides diversification without making the portfolio overly dependent on one asset.

The final 10% can go towards global equities.

Some of the strongest businesses in the world simply aren’t listed in India.

Companies like Apple, Microsoft, Nvidia and Amazon continue to dominate industries ranging from artificial intelligence to cloud computing and consumer technology.

A small allocation provides exposure to businesses operating across multiple economies rather than relying entirely on one market.

🌍 Interested in investing globally?

Global investing has become increasingly difficult for Indian investors. Most Indian mutual funds with overseas exposure are currently not accepting fresh investments due to regulatory limits.

Today, the primary routes available are GIFT City-based investment products or opening a foreign brokerage account.

We can help you evaluate both options, complete the onboarding, and make the entire process simple.

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₹1 Crore Is Where Diversification Starts Paying You

A ₹1 Crore portfolio gives you something that smaller portfolios usually don’t.

Choice.

Different asset classes begin to meaningfully influence returns, and more importantly, they reduce the impact of any one event going wrong.

Suggested Allocation

Asset - Allocation

Indian Equity - 45%

Global Equity - 20%

Debt - 15%

Gold -10%

Liquidity - 10%

At this stage, diversification stops being a theory and starts becoming a practical risk management tool.

Take today’s environment as an example.

Higher crude oil prices don’t affect every asset equally.

Airlines, logistics and chemical companies usually face rising input costs. Energy producers often benefit from stronger oil prices. Gold can gain during periods of uncertainty, while debt markets react to changing inflation and interest rate expectations.

Owning assets that respond differently to the same event helps smooth the overall portfolio experience.

That’s why we’d allocate nearly half the portfolio to Indian equities, with an emphasis on diversified large-cap and flexi-cap funds. India’s domestic economy continues to remain resilient, supported by expected GDP growth of around 6.5%, healthy domestic consumption and corporate earnings.

The next 20% belongs to global equities.

The objective isn’t to replace India. It’s to complement it.

Different economies go through different business cycles. A globally diversified portfolio gives you exposure to sectors such as advanced technology, healthcare and enterprise software, where several global companies continue to lead innovation.

The 15% debt allocation provides stability if interest rate expectations change or equity markets witness sharp corrections.

Around 10% in gold adds another layer of diversification. Gold has remained an effective long-term hedge during periods of geopolitical uncertainty, although recent corrections are also a reminder that it shouldn’t dominate a portfolio.

The remaining 10% stays in liquid funds or cash equivalents.

Holding liquidity isn’t about expecting markets to fall.

It’s about having capital available if attractive opportunities appear.

₹10 Crore Changes The Investment Conversation

A market correction feels very different when the numbers become larger.

A 30% decline on a ₹10 lakh portfolio is ₹3 lakh.

The same decline on a ₹10 crore portfolio is ₹3 crore.

The mathematics are identical.

The decision-making rarely is.

This is where portfolio construction begins to resemble institutional investing.

Suggested Allocation

Asset - Allocation

Core Indian Equity - 45%

Global Equity - 20%

Debt, G-Secs & Gold - 20%

Alternatives - 15%

The foundation remains high-quality Indian businesses.

Companies with durable cash flows, strong balance sheets and consistent earnings tend to recover better through economic cycles than businesses dependent on aggressive growth assumptions.

Global equities continue to deserve a meaningful allocation for geographical diversification.

The next 20% sits in debt, Government Securities (G-Secs) and gold.

Government Securities are bonds issued by the Government of India and are generally considered among the safest fixed-income investments.

Together, these assets help cushion portfolios during periods of market stress, inflation surprises or slowing growth.

The final 15% can be allocated to alternatives.

That may include REITs, which allow investors to earn income from commercial real estate, private credit, where capital is lent directly to businesses, and selective Pre-IPO opportunities for investors comfortable with relatively lower liquidity.

These investments shouldn’t dominate a portfolio.

They should complement it.

Large portfolios rarely depend on one economic outcome.

Some assets should perform well if economic growth remains strong.

Some should protect capital if inflation rises.

Others should continue generating income regardless of market conditions.

That balance becomes increasingly valuable as wealth grows.

The Best Portfolio Isn’t The One That Predicts The Future

Markets have always faced uncertainty.

Oil shocks.

Wars.

Financial crises.

Pandemics.

Every event dominates headlines while it is unfolding.

Eventually, markets move on to the next chapter.

India’s economic foundation continues to remain healthy. GDP growth is expected to stay around 6.5%, corporate earnings continue to expand and domestic investment flows remain supportive for equities. At the same time, higher oil prices and geopolitical risks are likely to keep volatility elevated over the coming months.

That doesn’t mean portfolios need to be rebuilt every time headlines change.

It simply means they should be built with enough resilience to handle uncertainty.

The allocation changes as capital grows.

The investment philosophy doesn’t.

Build a portfolio that can stay invested through uncertainty.

Compounding usually takes care of the rest.

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It has become one of the fastest-growing major economies, millions of new investors have entered the market, and Indian businesses have created exceptional long-term returns.

But history also tells us something equally important.

No single country leads global markets forever.

Leadership changes.

Capital follows innovation.
Currencies strengthen and weaken.
Industries evolve.

That is why the world’s largest pension funds, sovereign wealth funds and endowments rarely invest in just one market.

They diversify across countries.

Today, Indian investors can do exactly the same.

📌 What We’re Covering Today

• Why global diversification matters even if you’re optimistic about India

• Understanding the difference between the S&P 500 and Nasdaq 100

• Why passive investing has become the preferred approach globally

• A simple framework to build a global allocation

• Why GIFT City has made international investing easier than before

1️⃣ Your Portfolio May Be More Concentrated Than You Think

Diversification is often misunderstood.

Owning 25 or 30 Indian companies may feel diversified.

But every one of those businesses still depends on the same economy, the same currency and the same market cycle.

If India’s economy slows, many of those businesses are likely to feel the impact together.

If the rupee weakens, your overseas purchasing power declines.

If another country leads the next wave of innovation, your portfolio participates only indirectly.

This is exactly why large pension funds, endowments and sovereign wealth funds allocate capital across multiple countries.

It isn’t because they expect one country to disappoint.

It’s because no economy leads every decade.

The numbers help put this into perspective.

Today, the United States represents 48.2% of global equity market capitalisation, while India accounts for 3.65%, despite being the fifth-largest equity market globally.

For many years, gaining exposure to those global businesses involved opening overseas brokerage accounts and managing investments across different jurisdictions.

GIFT City has made that process significantly simpler.

Instead of investing directly into overseas securities, investors can now access regulated international funds domiciled in GIFT City, complete the onboarding process from India, and build global exposure without managing foreign brokerage accounts or direct overseas holdings.

That may sound like an operational change.

In reality, it lowers one of the biggest barriers that kept many Indian investors away from international investing.

Global investing doesn’t replace India.

It complements it by reducing dependence on a single economy and giving investors access to businesses, industries and currencies that aren’t available in the domestic market.

2️⃣ One Index Represents the Economy. The Other Represents Innovation.

Once investors decide to invest internationally, the next question becomes simple.

Where should that exposure come from?

The two most widely followed US indices answer different questions.

The S&P 500 represents the broader American economy.

It tracks 500 of the largest listed companies, covering technology, healthcare, financials, consumer goods, industrials and communication services.

Its largest holdings include Apple, Microsoft, Amazon, Alphabet, JPMorgan, Visa and Johnson & Johnson.

Technology accounts for roughly 32% of the index, making it diversified across multiple sectors.

The Nasdaq 100 takes a different approach.

It owns the 100 largest non-financial companies, with nearly 50% allocated to technology.

Its largest holdings include NVIDIA, Microsoft, Apple, Broadcom, Amazon, Meta and Tesla.

This makes it far more concentrated around artificial intelligence, semiconductors, cloud computing and digital infrastructure.

Professional investors rarely compare these indices as competitors.

They think about the role each plays inside a portfolio.

One provides broad exposure to the world’s largest economy.

The other provides concentrated exposure to companies driving the next phase of technological innovation.

3️⃣ The Bigger Story Isn’t America. It’s Passive Investing.

Over the last decade, one of the largest shifts in investing hasn’t been geography.

It has been strategy.

Passive investing has steadily become the preferred choice for millions of investors globally.

The reason is straightforward.

According to the latest SPIVA 2025 report, 79% of actively managed US large-cap funds underperformed the S&P 500.

Instead of trying to identify the next winning stock or fund manager, passive investing simply owns the market itself.

It removes stock selection.

It lowers costs.

And it allows investors to participate in long-term economic growth without constantly making decisions.

This philosophy sits behind the two PPFAS GIFT City Fund of Funds.

The PPFAS GIFT S&P 500 Fund invests into an Ireland-domiciled UCITS ETF tracking the S&P 500.

The PPFAS GIFT Nasdaq 100 Fund follows the same structure for the Nasdaq 100.

For investors, that means:

• Exposure through a regulated Indian fund structure

• No US brokerage account

• No W-8BEN paperwork

• No direct ownership of US securities

• No US estate tax exposure

🌍 Global Investing

If you’re looking to add international exposure alongside your Indian portfolio, you can now invest through twGlobal.

We currently offer access to both the PPFAS GIFT S&P 500 Fund and PPFAS GIFT Nasdaq 100 Fund, with complete onboarding support, but only limited to 10 slots. DM us to secure your allocation before the slots are sold out.

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4️⃣ So How Should Investors Think About Global Allocation?

The objective isn’t to replace India.

India remains one of the fastest-growing major economies.

The objective is to add another source of long-term growth.

A practical framework is to allocate around 20% of your equity portfolio internationally, while continuing to keep roughly 80% invested in India.

Within that global allocation:

🌏 60–70% can go into the S&P 500, providing diversified exposure across sectors.

🚀 30–40% can go into the Nasdaq 100, adding exposure to technology, AI and innovation-led businesses.

This approach balances stability with growth while reducing dependence on a single market.

5️⃣ Why Now?

Until recently, investing in US equities meant opening a foreign brokerage account, completing additional paperwork, managing overseas transfers, and handling tax documentation.

That has changed.

Through GIFT City, Indian investors can now access global markets through regulated Indian fund structures. The PPFAS GIFT S&P 500 Fund and PPFAS GIFT Nasdaq 100 Fund provide exposure to US markets without opening a foreign brokerage account or directly owning US securities.

The timing is also worth noting.

Most international mutual fund categories in India remain closed to fresh subscriptions due to overseas investment limits. GIFT City has emerged as an alternative route for global investing, and investor interest has accelerated rapidly. Capital commitments in GIFT City’s IFSC have crossed US$32 billion, supported by a 60-fold increase in foreign inflows and offshore investments, reinforcing its position as India’s gateway to global capital.

As more investors begin allocating internationally, these investment windows may not remain available indefinitely. For investors considering global diversification, starting while access remains open is a practical approach rather than waiting until capacity becomes constrained again.

Final Thought

Every portfolio reflects a view of the future.

A portfolio invested in one country assumes that country will continue leading.

A globally diversified portfolio accepts that leadership changes over time and prepares for it.

That difference may not matter next month.

It can matter enormously over the next twenty years.

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Markets moved sharply during the conflict. Oil spiked, the rupee weakened, inflation fears returned, and investors became cautious.

Now, the conversation has changed.

A ceasefire between the US and Iran has pushed Brent crude back to around $69 per barrel after touching nearly $120 during the conflict. If these conditions hold, India could save $50-60 billion annually on its oil import bill, inflation pressure could ease, and policymakers may regain room to support growth.

The headlines are about peace.

The bigger opportunity may be what lower oil prices can do for India’s economy and for businesses over the next few quarters.

📌 What we’re covering today

• Why markets usually recover before the economy does

• How one commodity affects hundreds of Indian companies

• Why lower oil prices improve much more than fuel costs

• The macro shifts investors should pay attention to

• How investors can position themselves today

The market doesn’t wait for peace

One lesson markets have repeated for decades is simple.

They rarely wait for everything to become perfect.

Instead, they start moving when uncertainty begins to reduce.

History supports this. Research covering major military conflicts since World War II found that markets were positive 73% of the time one year after conflicts began, 86% after three years, 95% after five years, and positive in every ten years studied.

That pattern is beginning to show again.

During the conflict, Brent crude surged from around $70 to nearly $120 per barrel, increasing India’s import bill, weakening the rupee, and raising inflation expectations.

Following the peace agreement, Brent has fallen back to nearly $83. That single move changes several parts of the macro picture at once.

Before

• Oil prices were rising.

• India’s import bill was increasing.

• Inflation fears were building.

• Corporate input costs were moving higher.

• The rupee remained under pressure.

• Markets were pricing in the possibility of higher interest rates.

Now

• Oil prices have declined.

• India’s import bill is expected to reduce.

• Inflation pressure is beginning to ease.

• Companies are seeing lower input costs.

• The rupee has started stabilising.

• The RBI has greater flexibility to support growth.

The numbers help explain why.

India imports nearly 85% of the oil it consumes.

Every $10 decline in Brent crude reduces India’s annual oil import bill by roughly $13-15 billion.

A move from $120 to $69 could save approximately $50-60 billion every year if sustained. That is large enough to materially improve India’s current account deficit.

Inflation is also beginning to ease.

Wholesale inflation had climbed to 8.3% in April 2026, largely because of expensive imported energy and a weaker rupee. With crude falling back, nearly 30% of the imported cost shock has effectively disappeared, giving room for inflation to soften over the coming months.

Markets are already beginning to shift from protecting against risk to pricing a gradual economic recovery.

One price changed. Hundreds of companies benefit.

Crude oil affects far more businesses than most investors realise.

Many companies don’t sell oil.

They simply spend a lot because of it.

Fuel, transportation, packaging, plastics, chemicals, and several industrial inputs are linked directly or indirectly to crude prices.

When those costs fall while selling prices remain broadly unchanged, profits often grow much faster than revenues.

That is called operating leverage. In simple terms, a small reduction in costs can create a much larger improvement in profits.

✈️ Aviation: Lower Aviation Turbine Fuel (ATF) costs improve profitability.

🎨 Paints: Crude-based raw material costs decline.

🚚 Logistics: Lower diesel prices reduce transportation expenses.

🧪 Chemicals: Feedstock costs become cheaper.

📦 Packaging: Petrochemical input costs fall.

The government also benefits through lower fuel and fertiliser subsidies, while oil marketing companies recover margins if retail fuel prices remain stable for some time.

Companies with high fixed costs usually benefit the most.

Every rupee saved on inputs contributes disproportionately to profits.

That is one reason markets often rerate these businesses before earnings reports actually improve.

India offers excellent opportunities, but it doesn’t have to be your only market.

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The bigger story is liquidity.

Lower oil prices improve several parts of the economy at the same time.

• A smaller import bill

• Lower inflation

• A stronger rupee

• Lower subsidy requirements

• Better government finances

Together, these changes create a healthier environment for businesses and investors.

The RBI also has another lever that deserves attention.

It recently announced support for new FCNR(B) deposits between 8 June and 30 September 2026.

FCNR deposits allow Non-Resident Indians (NRIs) to keep their money in US dollars with Indian banks.

Normally, banks must pay to protect themselves from currency movements. The RBI has agreed to absorb that cost for new deposits, making it 150-200 basis points cheaper for banks to offer attractive rates.

Banks have already increased FCNR deposit rates from roughly 3.5-5% to around 5.5-7%, making them competitive with US Treasury yields of 4-5%.

Why does this matter?

Those dollar deposits strengthen India’s foreign exchange reserves.

Brokerage estimates suggest India could attract anywhere between $20 billion and $70 billion, with many estimates clustering around $25-50 billion over the coming months.

India has seen this before.

A similar scheme in 2013 attracted nearly $34 billion in just three months and helped stabilise the rupee during the taper tantrum.

There is another benefit that receives far less attention.

Lower oil prices reduce subsidy costs.

That gives the government additional fiscal space.

Money that would have supported expensive fuel can instead be directed towards roads, railways, and public infrastructure, supporting growth over a much longer period.

Meanwhile, India’s broader macro picture remains healthy.

Bank credit is growing at 16.2%, forex reserves stand near $698 billion, and the RBI’s FY27 GDP forecast of 6.6% now has room to improve if lower oil prices persist.

How we’d position a portfolio today

Rather than trying to predict every headline, it helps to think in terms of three buckets.

① Core Compounders (50-60%)

The foundation remains the same.

Businesses with strong balance sheets, consistent earnings, and durable competitive advantages should continue forming the largest allocation.

Examples include:

• Private banks

• Market infrastructure businesses

• Consumer leaders

• Diversified industrial companies

② Recovery Beneficiaries (25-35%)

These businesses could benefit directly from improving macro conditions.

Lower crude prices reduce costs.

Stable interest rates support demand.

Better sentiment encourages investment.

Key themes include:

✈️ Aviation

🚚 Logistics

🎨 Paints

🧪 Chemicals

🚗 Auto & Auto Ancillaries

Many of these sectors don’t require extraordinary revenue growth.

Even a modest improvement in margins can lead to significantly faster earnings growth because operating leverage works in their favour.

③ Tactical Allocation (10-15%)

For investors comfortable taking measured tactical positions, selective opportunities may emerge in:

• Capital markets

• Capital goods

• Infrastructure

• Export-oriented businesses if global demand improves

This bucket should remain relatively small and be reviewed periodically because it is more sensitive to macro changes.

Headlines fade. Trends stay.

The ceasefire matters.

But markets usually move because expectations change.

Lower crude prices improve corporate profitability.

A stronger rupee reduces external pressure.

Easing inflation gives the RBI greater flexibility.

Foreign capital may return as valuations remain attractive.

Today, the Nifty 50 trades at around 20.4x trailing earnings, below its 10-year median of 23.4x. Foreign institutional ownership has fallen to 14.7%, a 14-year low, while Goldman Sachs estimates $25-30 billion of additional bond inflows over the next 12-18 months following India’s inclusion in major global bond indices.

None of these developments guarantees higher markets.

But together, they create a healthier backdrop than the one investors were facing only a few weeks ago.

For long-term investors, the objective isn’t to predict every geopolitical event.

It is to recognise when the broader environment has become more supportive and continue investing with discipline.

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Regulatory hurdles, legal proceedings, governance reviews, and multiple rounds of approvals kept India’s most anticipated listing on hold.

That wait may finally be ending.

NSE has filed its Draft Red Herring Prospectus (DRHP) for an IPO expected to be worth around ₹30,000 crore, making it the largest public offering in Indian market history. The entire issue is an Offer For Sale (OFS), which means existing shareholders are selling shares, and NSE itself will not receive any money from the IPO.

But the company is cash-rich, and hence this IPO is more a liquidity event than a fundraise for expansion.

Founded in 1992, NSE today serves 129.1 million registered investors spread across more than 99% of India’s postal codes. It operates the largest equity derivatives exchange globally and sits at the centre of India’s capital markets.

When investors buy NSE, they are buying a small ownership stake in the marketplace where India invests, trades, raises capital and creates wealth.

📌 What We’re Covering Today

• Why NSE is often described as India’s financial toll road

• How the exchange became one of India’s most profitable businesses

• NSE vs BSE - The scale difference

• The moat that made NSE dominant

• The risk most investors are overlooking

• Why institutions are paying close attention to this listing

1. Understanding NSE In One Sentence

NSE is India’s financial toll road.

Every time an investor buys a stock, trades an option, invests through an ETF, accesses market data, lists a company, or connects trading infrastructure to the exchange, NSE earns a fee.

Its business model is surprisingly simple.

Revenue Mix

• Transaction Charges: 78.65%
• Data & Connectivity: 6.80%
• Nifty Licensing: 2.83%
• Listing Services: 2.12%
• Others: 9.60%

In FY26 alone, NSE generated over ₹16,600 crore in operating revenue, with transaction charges contributing nearly ₹13,057 crore.
What makes exchanges powerful is something called a network effect.

As more investors trade on an exchange, liquidity improves. Better liquidity attracts more traders. More traders attract more companies. More companies attract more investors.

Over time, that flywheel becomes extremely difficult to disrupt.

Today, NSE controls 92.99% of India’s cash market turnover, 99.79% of equity futures turnover, and 74.71% of equity options premium turnover. In several segments, it has effectively become the default destination for market participants.

2. Why NSE Is One Of The Most Profitable Businesses In India

Most investors mentally place exchanges alongside financial companies.

Economically, they often resemble software businesses.

Once the infrastructure is built, the cost of processing one additional trade is tiny. Revenue can keep growing while costs move much more slowly.

That operating leverage shows up clearly in NSE’s numbers.

FY26 Snapshot

• Revenue: ₹16,601 crore

• Net Profit: ₹10,302 crore

• EBITDA Margin: 76.2%

• Debt: Zero

For comparison, many high-quality businesses would be delighted with a 20% operating margin. NSE generated over ₹76 of operating profit for every ₹100 of revenue.

Even more interesting is what the company does not need.

It does not need factories.

It does not need large inventories.

It does not need significant working capital to support growth.

The trading infrastructure has largely been built already. As market participation expands, a meaningful portion of incremental revenue can flow directly into profits.

That is one reason exchange businesses across global markets often command premium valuations.

📊 NSE Pre-IPO Opportunity

NSE is expected to list around ₹2,000 per share, implying a valuation of ~₹5 lakh crore and a P/E of ~49x versus BSE’s ~66x.

That suggests potential upside at listing.

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3. NSE vs BSE: The Scale Difference 📊

India has two major stock exchanges, but trading activity is heavily concentrated on one

In FY26, NSE processed ₹260.63 lakh crore of cash market turnover, compared to BSE’s average daily turnover of roughly ₹7,950 crore. That translated into a 92.99% market share for NSE, versus about 7% for BSE.

The gap is equally visible in the financials.

NSE vs BSE: Key Financial Metrics

Market Capitalization

• NSE: ₹4.99 lakh crore

• BSE: ₹1.70 lakh crore

Revenue

• NSE: ₹16,601 crore

• BSE: ₹5,124 crore

Profit

• NSE: ₹10,180 crore

• BSE: ₹1,327 crore

P/E Ratio

• NSE: 49x

• BSE: 68x

The takeaway: NSE generates over 3x the revenue and nearly 8x the profit of BSE, reflecting the scale advantages that come with being the primary marketplace for Indian capital markets.

4. The Question That Actually Matters

For long-term investors, the key question is simple:

What does the opportunity look like over the next decade?

NSE sits at the centre of several trends that are still in their early stages. India’s registered investor base has grown from 30.9 million in 2020 to 129.1 million in FY26. Assets linked to Nifty indices have reached ₹8.14 trillion, and nearly 3,000 companies are already listed on the exchange.

What Strengthens NSE?

• 129.1 million registered investors

• 2,978 listed companies

• ₹8.14 trillion in Nifty-linked AUM

• 425 Nifty indices

• World’s largest equity derivatives exchange

If more Indians invest through mutual funds, ETFs, direct equities, and retirement products over the coming years, a significant portion of that activity is likely to pass through NSE’s ecosystem.

The opportunity is substantial, but it is not without constraints.

The biggest risk does not come from competition. It comes from regulation.

Options trading contributed 60.2% of NSE’s revenue in FY26, while transaction charges accounted for nearly 79% of operating revenue.

Recent regulatory changes around derivatives trading reduced activity across several segments, contributing to a decline in FY26 profit to ₹10,302 crore from ₹12,188 crore a year earlier.

NSE benefits from regulation because it helps maintain trust, market integrity and barriers to entry. At the same time, regulation also influences how quickly its largest revenue engine can grow.

The long-term opportunity is closely tied to India’s growing participation in capital markets. The pace at which that opportunity translates into revenue, however, will continue to be shaped by the regulatory environment.

5. Why Is Everyone Paying Attention Now?

The IPO is attracting attention because it offers access to an asset that rarely becomes available.

NSE sits at the intersection of three structural trends shaping India’s financial system.

1️⃣ Financialisation

India’s registered investor base grew from 30.9 million in 2020 to 129.1 million in 2026, representing a CAGR of nearly 27%.

2️⃣ Capital Market Expansion

Companies raised ₹20.3 trillion through NSE during FY26. The exchange hosted 108 Mainboard IPOs and 111 SME IPOs in a single year.

3️⃣ Passive Investing

Assets linked to Nifty indices have grown to ₹8.14 trillion across 425 indices. Every new ETF and index fund expands the reach of the NSE ecosystem.

The IPO may dominate headlines because of its ₹30,000 crore size.

The larger story is that investors are finally getting access to one of the most profitable and strategically important businesses in India’s financial infrastructure.

The real question is not whether India will trade more next year.

It is whether India will invest, save and participate in capital markets more actively ten years from now.

If the answer is yes, NSE sits directly in the path of that growth. As per NSE and various media reports and NSE’s CEO, the IPO is expected to hit the public markets by Diwali 2026.

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The United States.

That made sense. Large technology companies dominated returns, capital flowed steadily into US assets, and investors had little reason to search elsewhere.

Lately, something interesting has been happening.

South Korea’s KOSPI has surged 84% year-to-date. Taiwan’s TAIEX has gained 54%. Brazil’s Ibovespa delivered 51% returns in US dollar terms. Vietnam advanced 40%, while the broader MSCI Emerging Markets Index climbed 34.4%. Indonesia’s IDX Composite rose 21%.

When markets across different regions begin moving higher at the same time, investors pay attention. It often signals a shift in where capital is finding opportunity.

What are we covering today?

• What exactly are emerging markets?

• Which emerging markets have performed best recently?

• Why global capital is returning to these markets

• The different stories driving each rally

• What investors can learn from these developments

What are emerging markets?

Emerging markets are countries that sit between developing and developed economies.

They often share a few characteristics:

• Faster economic growth

• Expanding middle-class consumption

• Improving infrastructure

• Growing stock markets

• Higher volatility compared to developed markets

The MSCI Emerging Markets Index includes countries across Asia, Latin America, Eastern Europe, the Middle East, and Africa.

Together, these economies account for nearly 85% of the global population and contribute approximately 40% of global GDP.

Importantly, emerging markets are not one single investment theme. Each country has its own drivers, risks, and opportunities.

The Emerging Markets Leaderboard 🏆

1. KOSPI (South Korea) - +84% YTD

2. TAIEX (Taiwan) - +54% YTD

3. Ibovespa (Brazil) - +51% (USD)

4. VN Index (Vietnam) - +40%

5. MSCI Emerging Markets - +34.4%

6. IDX Composite (Indonesia) - +21%

Different economies.

Different industries.

Different policy environments.

So why are they rising together?

Why is capital returning to emerging markets?

Part of the answer lies in valuations.

The S&P 500 trades at around 23.6 times forward earnings, while the broader MSCI Emerging Markets Index trades closer to 13.6 times.

In simple terms, investors are paying considerably less for every dollar of expected earnings in emerging markets.

Earnings expectations have also improved.

UBS expects MSCI Emerging Markets earnings to grow by around 20% in 2026, supported by stronger corporate profitability and improving economic conditions.

At the same time, the US Dollar Index (DXY) has declined to around 96.8, while markets are pricing in multiple interest rate cuts from the US Federal Reserve.

Historically, a softer dollar has often been supportive for emerging markets.

The result is a combination investors tend to favour:

Reasonable valuations.

Improving earnings.

And renewed capital flows.

Four Markets. Four Different Stories.

Brazil: The Valuation Story

Brazil has been one of the strongest-performing major markets.

Its forward price-to-earnings ratio stands at 9.3x, below its own 10-year average of around 10x.

Even after returning 51% in US dollar terms, Brazil still offers a 4.16% dividend yield, compared with roughly 1.15% for the S&P 500.

Foreign investors have played a major role.

Brazil attracted $26.87 billion in foreign portfolio inflows, while April 2026 alone recorded $8.91 billion in FDI inflows, the highest level in five months.

Vietnam: The Index Upgrade Story

Vietnam’s market has gained close to 40%, supported by strong earnings growth and a structural catalyst.

The country is scheduled to move from a frontier market classification to a secondary emerging market in the FTSE Russell Index.

This matters because passive funds tracking the index are required to buy Vietnamese stocks.

Current estimates suggest $1.67 billion of passive inflows, alongside $4 billion to $5 billion of active flows, bringing expected inflows to $6 billion to $8 billion.

The implementation is expected to take place gradually between September 2026 and September 2027, creating a multi-quarter source of demand.

Taiwan: The AI Story

Taiwan has become one of the biggest beneficiaries of the global build-out in artificial intelligence infrastructure.

At the centre of this story is TSMC, the world’s leading semiconductor manufacturer.

In the first quarter of 2026:

• Revenue grew 35% to 40% year-on-year

• Net profit increased 58%

• Gross margins reached 66.2%

Taiwan’s semiconductor exports also surged.

Electronic component exports rose 59.8% year-on-year, while semiconductor exports expanded 61.3%.

Demand for AI-related hardware continues to support earnings growth across the sector.

South Korea: The Governance Story

South Korea’s recent market performance reflects a combination of corporate reform and stronger earnings expectations.

The government’s Corporate Value-Up Program, launched in 2024, was designed to address the long-standing “Korea Discount”, a term used to describe the tendency of Korean companies to trade at lower valuations than global peers despite solid fundamentals.

Under the program, companies are encouraged to publish plans aimed at improving return on equity, increasing dividend payouts, enhancing disclosures, and implementing share buybacks. By early 2026, 177 listed companies, including 131 KOSPI constituents, had formally adopted Value-Up disclosures.

Investor participation followed. Assets tracking the official Korea Value-Up Index ETFs expanded by 255.3% to 1.7 trillion won.

Despite these developments, valuations remain relatively restrained. Bloomberg data showed the KOSPI trading at around 8.1 times forward earnings in May 2026, well below many developed markets.

For investors, South Korea increasingly represents a market where improving corporate governance, shareholder-friendly policies, and attractive valuations are beginning to converge.

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Final Thoughts

The recent performance numbers have certainly attracted attention.

South Korea rose 84% year-to-date.

Taiwan gained 54%.

Brazil returned 51% in US dollar terms.

Vietnam advanced 40%.

The broader MSCI Emerging Markets Index climbed 34.4%.

Indonesia added 21%.

Yet the bigger story is not about identifying the single best-performing country.

It is about recognising that leadership in global markets is becoming broader.

Some markets are benefiting from artificial intelligence.

Others from valuation re-ratings.

Some from structural reforms.

Others from predictable institutional flows.

Different stories.

Different drivers.

One common thread.

Global capital appears increasingly willing to venture beyond its traditional destinations.

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NVIDIA became one of the most valuable companies in history. Microsoft, Meta, Amazon, Alphabet, and Broadcom added massive market value. The Nasdaq repeatedly touched record highs.

At the center of all this is one question:

How much of this rally is backed by real business growth, and how much is the market pricing the future too aggressively?

The interesting part is that this debate exists because AI is already producing a real economic impact. Companies are spending billions today. Data centres are being built at a historic pace. Power demand is rising. Semiconductor supply chains are stretched globally.

But markets rarely wait for perfect clarity.

And that is where the conversation becomes important for investors.

What are we covering today?

• Why AI stocks rallied so aggressively
• Why Nvidia became the biggest winner of this cycle
• Where bubble concerns are coming from
• Why AI is increasingly becoming an energy and infrastructure story ⚡
• What this means for Indian investors

1. The AI Rally Is Being Driven By Infrastructure Spending

Most people think the AI boom is mainly about chatbots and software.

The first phase has actually been an infrastructure buildout.

AI models require enormous computing power. That demand created a spending cycle across GPUs, servers, networking systems, cloud infrastructure, cooling systems, and semiconductor manufacturing.

Global AI-related spending is expected to reach nearly $2.5 trillion in 2026. Around $1.4 trillion of that may go directly into AI infrastructure and data-centre expansion.

The largest tech companies are spending at an extraordinary scale.

Amazon, Microsoft, Alphabet, Meta, and Oracle together are expected to spend roughly $600–665 billion in capex during 2026. Around 75% of that is estimated to be linked directly to AI infrastructure.

That money flows into:

• Nvidia GPUs
• TSMC semiconductor manufacturing
• Broadcom networking systems
• Advanced memory suppliers
• Data-centre infrastructure firms

AI-capex growth for hyperscalers is currently running at nearly 60–70% YoY.

At the same time, AI-generated revenue still forms only a relatively small portion of total cloud revenue for many companies.

That gap explains why investors are divided right now.

Some believe this is the early stage of a decades-long technology cycle.

Others believe markets are already pricing years of future success upfront.

2. Why Nvidia Became The Face Of The AI Boom

Every major technology cycle has one company that becomes the core supplier.

During the gold rush, shovel sellers often made the most money.

In the AI cycle, Nvidia became that supplier.

Its fiscal 2026 data-centre revenue reached nearly $170 billion, accounting for around 88% of total revenue.

In one quarter alone, Nvidia generated over $62 billion in data-centre sales, up roughly 75% YoY.

That scale is almost unprecedented for a large-cap technology company.

The reason is simple.

Modern AI models require highly specialised GPUs. NVIDIA dominates that market.

At one point, supply became so tight that GPU delivery lead-times stretched across multiple quarters. TSMC’s advanced chip-packaging capacity is fully booked, while high-bandwidth memory supply remains constrained globally.

That created extraordinary pricing power.

But this is also where valuation debates begin.

Markets are currently assuming:

• AI demand stays extremely strong
• Margins remain elevated
• Competition stays limited
• Infrastructure spending continues aggressively

And historically, when markets price near-perfect outcomes, volatility usually rises later.

3. The Bubble Debate Is About Expectations, Not Technology

The comparison many investors make is the dot-com bubble.

There are similarities.

The S&P 500 is now heavily concentrated. The top 10 companies account for nearly 40% of the index. Some AI-focused ETFs have 40–50% exposure to just a few names.

Retail participation in AI-themed products has also surged sharply.

But the differences matter too.

During the dot-com era, many internet companies had weak revenues and poor profitability.

Today’s AI leaders are among the strongest businesses globally.

Microsoft, Meta, Alphabet, and Nvidia generate enormous free cash flow and operate with strong balance sheets.

That gives this cycle far stronger economic foundations.

Still, markets can overprice even excellent businesses.

Professionals are increasingly tracking:

• AI revenue vs AI spending
• Data-centre utilisation rates
• Electricity demand from AI infrastructure
• Semiconductor bottlenecks
• Enterprise AI monetisation timelines`

Right now, AI spending is happening at full scale.

AI monetisation is still developing gradually.

That distinction matters.

4. AI Is Slowly Becoming An Energy Story ⚡

One of the most underappreciated parts of this rally is electricity demand.

AI data centres consume enormous power.

Some large US data centres now require over 1 GW of continuous electricity. That is enough to power nearly 800,000–900,000 households.

Global data-centre electricity demand could reach nearly 1,050 TWh by 2026.

Utilities and power-grid operators are already discussing grid-modernisation plans because AI-related connection demand is rising rapidly.

That changes the investment implications completely.

Investors are now increasingly tracking:

• Power utilities
• Grid infrastructure
• Transformer manufacturers
• Cooling-system companies
• Nuclear-energy partnerships
• Data-centre REITs

The AI rally is gradually expanding beyond software and semiconductors.

It is becoming an industrial capex cycle.

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5. What Does This Mean For Indian Investors? 🇮🇳

Many Indian investors already have indirect exposure to the US AI rally.

Through:

• Nasdaq ETFs
• US-focused mutual funds
• AI-themed FoFs
• Indian IT companies
• Semiconductor and electronics manufacturing themes

There is also a currency angle.

When the US dollar strengthens alongside US technology stocks, Indian investors benefit from both equity appreciation and rupee depreciation.

That can amplify returns significantly during strong global tech cycles.

But concentration risk is also rising.

If a few major AI companies disappoint on earnings or spending guidance, global technology indices can correct sharply because index exposure is heavily concentrated.

That is why investors should separate:

AI excitement from, AI cash-flow generation.

And also separate:

short-term market momentum from 10-year technology adoption.

AI is likely to influence software, healthcare, finance, manufacturing, defence and productivity globally over the next decade.

But strong technological shifts do not eliminate valuation risk.

The better approach may involve focusing on businesses with:

• Real cash flows
• Strong infrastructure positioning
• Sustainable competitive advantages
• Reasonable long-term earnings visibility

Because historically, the largest winners from major technology cycles are often the companies controlling compute, power, networking and distribution infrastructure.

Not always the loudest applications.

Final Thoughts

The AI rally is built on a real technological shift.

That part is becoming increasingly difficult to ignore.

Global AI infrastructure spending is already reshaping semiconductors, cloud computing, electricity demand and industrial capex.

But markets can still move ahead of business reality for periods of time.

And when expectations rise faster than monetisation, volatility usually follows.

For investors, the useful question may not be:

“Is AI real?”

The more important question may be:

“How much future success is already reflected in current prices?”

Because over the next few years, that distinction may decide where the strongest long-term returns actually emerge.

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Petrol prices in India rose by ₹3/litre in May 2026.

• Delhi petrol prices moved to ₹97.77/litre.

• Mumbai crossed ₹106/litre again.

• CNG prices in Delhi also increased by ₹2/kg.

The trigger came from outside India.

The Iran conflict pushed Brent crude above $100/barrel and reignited concerns around the Strait of Hormuz, a route through which nearly 20% of global oil trade passes every day.

For India, that matters immediately.

India still imports nearly 88% to 90% of its crude oil requirements, and around half of those imports remain linked to the Hormuz corridor. Even a small disruption can ripple across inflation, transport costs, electricity demand, and household budgets.

But the larger story is not this month’s fuel hike.

India’s energy demand is still climbing rapidly, while global energy markets are becoming increasingly unstable.

And that combination is beginning to shape investment trends across transmission, renewables, smart grids, storage, and energy infrastructure.

🧠 What are we covering today?

• Why energy prices are becoming unstable again

• Why India remains highly exposed to global oil markets

• Which sectors and households feel the impact first

• The investing themes emerging from this shift

• How investors and households can prepare for the next decade of energy inflation

1. Why energy prices are becoming volatile again

Energy prices usually move because of three things:

• Supply disruptions

• Geopolitical conflict

• Demand growth

Right now, all three are active together.

The immediate trigger is the Iran conflict and tensions around the Strait of Hormuz. Roughly 20% of global oil trade passes through this route daily. Oil markets react very quickly because traders price future shortages long before physical supply actually falls.

India remains heavily exposed.

Around 53% of India’s crude imports in early 2026 came from Iraq, Saudi Arabia, UAE, Kuwait, and Qatar, all connected to the Hormuz route. India has diversified sourcing across nearly 40 countries, but risks linked to West Asia, the Red Sea, and shipping corridors remain elevated.

The financial impact becomes meaningful very quickly.

A sustained $10/barrel rise in Brent crude can increase India’s annual oil import bill by roughly $3–4 billion. A $20 move can push the additional burden toward $6–8 billion and widen the current account deficit.

That eventually affects:

• Inflation

• Rupee stability

• Government spending

• Corporate margins

• Household disposable income

There is also a second-order effect.

Every 10% rise in Brent crude, combined with mild rupee weakness, has historically added roughly 15–25 basis points to CPI inflation through transport, food, and manufacturing costs.

At the same time, global energy markets are tightening structurally.

Years of lower investment in oil exploration reduced spare production capacity. Renewable energy adoption is growing rapidly, but fossil fuels still dominate transport, aviation, shipping, and heavy industry. Countries are now treating energy security as a strategic priority instead of only an economic variable.

Key Insight

Energy inflation is increasingly becoming part of global geopolitical restructuring rather than only a short commodity cycle.

2. Why this matters directly to Indian households

Fuel inflation spreads through the economy very quickly.

Diesel is especially important because India’s logistics network still depends heavily on road transport.

Diesel accounts for roughly 40% of India’s petroleum-product consumption, and trucks alone consume nearly 64% of retail diesel usage. CRISIL estimates that every ₹5/litre increase in diesel prices can raise freight costs by around 2.5% to 2.8%.

That eventually flows into:

• Food prices

• FMCG distribution costs

• E-commerce deliveries

• Construction expenses

• Manufacturing margins

The pressure is already visible in aviation, too.

ATF prices for international carriers in Delhi rose about 5.3% in May 2026 to nearly $1,511 per kilolitre. Fuel usually forms 25% to 35% of airline operating costs, so even moderate fuel inflation compresses profitability quickly.

Then comes electricity demand.

India recorded an all-time peak power demand of nearly 256 GW in May 2026, around 6 GW above the previous record. Air-conditioner usage is now becoming one of the largest contributors to summer electricity spikes, especially in metros and Tier-2 cities.

India’s energy consumption itself is still rising structurally.

Total Primary Energy Supply crossed 9,32,816 KToe in FY25, up around 38% from FY16 levels. Per-capita energy consumption also increased from 15,296 MJ/person in FY16 to 18,096 MJ/person in FY25.

That matters because India is still relatively early in its energy-consumption curve compared to developed economies.

Key Insight

India’s challenge is not only expensive energy. It is rapidly rising energy demand across transport, cooling, manufacturing, and digital infrastructure.

3. The investing themes investors are beginning to track ⚡

The market is increasingly treating energy as an infrastructure theme instead of only a commodity theme.

That changes where opportunities are emerging.

A) Transmission & Grid Infrastructure

India plans roughly ₹9 trillion of transmission capex through 2032.

Inter-regional transmission capacity is expected to rise from around 119 GW to 168 GW, while over 1.91 lakh circuit-km of new transmission lines are planned to support renewable integration.

This matters because renewable energy cannot scale without transmission expansion.

Institutional commentary across the sector increasingly mentions:

• 12–18 month transformer delivery timelines

• High utilisation in higher-voltage equipment

• Strong order visibility into FY27 and FY28

Grid equipment and transformer manufacturers are already seeing strong order inflows across 400-kV and 765-kV projects.

B) Renewable Energy & Storage

India’s renewable capacity rose from around 90 GW in FY16 to nearly 229 GW in FY25.

Solar capacity alone reached roughly 140 GW by January 2026.

But solar brings another challenge.

Electricity demand continues after sunset, while solar generation falls sharply during evening hours. Grid studies now show steep evening demand ramps across multiple states.

That is increasing the importance of battery storage.

Estimates linked to India’s renewable plans suggest that 4–8 hour battery storage systems may be needed for 10% to 20% of aggregate solar capacity by the 2030 horizon.

C) Smart Grids & Energy Efficiency

India has already installed over 5.6 crore smart meters under various schemes.

In several metros, advanced metering infrastructure has reduced AT&C losses by roughly 3–5 percentage points where deployments are complete.

The larger shift is becoming visible:

Utilities are slowly moving from reactive power distribution toward data-driven grid management.

At the household level, energy efficiency is becoming financially meaningful too.

A petrol car running at current fuel prices costs roughly ₹7/km to operate. An EV charged at home costs around ₹1.2–1.5/km.

For urban commuters covering 1,200–1,500 km per month, that can translate into annual fuel savings of nearly ₹80,000–₹1 lakh.

Rooftop solar economics are also improving rapidly.

In states like Rajasthan and Gujarat, 3 kW residential systems are now achieving payback periods close to 3.5–5 years under current subsidy structures.

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4. So how do you protect yourself from rising energy costs?

For households, energy inflation slowly compounds into monthly expenses.

Even a ₹10–15 increase in cab fares or delivery charges can add ₹300–900 monthly for regular urban users. Over several years, those numbers become meaningful.

That is why efficiency starts mattering more during prolonged energy cycles.

For households:

• Fuel-efficient mobility becomes financially attractive

• Rooftop solar economics improve as electricity tariffs rise

• EV adoption starts making sense for high-mileage commuters

• Energy-efficient cooling systems reduce long-term electricity costs

For investors, energy inflation usually creates two broad categories of beneficiaries:

• Infrastructure owners with pricing power

• Businesses solving transmission, storage, and efficiency bottlenecks

At the same time, energy-sensitive sectors often face pressure:

• Airlines

• Logistics-heavy businesses

• Paints and chemicals

• Fuel-intensive manufacturing

Historically, major energy disruptions tend to reshape supply chains, government policy, and infrastructure spending for years after the original crisis fades.

That is why energy transitions often become decade-long investment themes instead of short trading cycles.

Key Insight

The larger opportunity may increasingly sit in businesses improving energy delivery, storage, transmission, and efficiency rather than businesses simply consuming fuel aggressively.

Conclusion

India’s energy story is entering a very different phase.

Demand is rising rapidly.
Global supply chains are becoming less predictable.
Energy security is turning into an economic strategy.

At the same time, India is accelerating investments across:

• Transmission infrastructure

• Renewable energy

• Smart grids

• Storage systems

• Domestic energy resilience

That creates pressure in the short term.

But it also creates long-duration opportunities tied to how India plans to power a much larger economy over the next two decades.

And for investors, the bigger question may not be where oil prices move next month.

It may be how India plans to build, distribute, store, and consume energy at scale for the next generation.

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For years, NSE was the undisputed center of Indian markets. Most trades, deepest liquidity, strongest derivatives franchise, and the default choice for institutions and traders.

BSE, despite being Asia’s oldest exchange, was often treated as the secondary player.

That equation is beginning to change.

Over the last year, BSE’s stock has been up nearly 78%, options volumes have surged, and its profitability has expanded sharply. At the same time, NSE continues to remain India’s dominant exchange by a very large margin and is preparing for one of the most anticipated IPOs in the country.

And that brings up an important investing question:

As India’s investing culture deepens, could exchanges become some of the strongest long-term compounding businesses in Indian finance?

What are we covering today

• Why exchange businesses are so profitable
• Why BSE is suddenly getting rerated
• Why NSE remains structurally dominant
• What investors may be underestimating
• Which exchange may offer the better long-term opportunity

1️⃣ Why exchange businesses are so attractive

Most businesses need factories, inventory, or physical expansion to grow revenue.

Exchanges work differently.

Every time someone buys or sells a stock, option, ETF, or derivative contract, the exchange earns a fee.

Which means:

Higher participation → higher trading activity → higher exchange revenue.

And because technology costs don’t rise proportionately with volumes, profitability scales very fast.

That’s why exchanges globally tend to become extremely high-margin businesses.

NSE’s FY26 numbers are a good example of this operating leverage.

Its Q4 FY26 revenue from operations rose 32% YoY to ₹4,968 crore, while operating EBITDA rose 30% YoY to ₹3,633 crore with EBITDA margins staying around 73%. PAT for Q4 FY26 came in at ₹2,871 crore.

BSE showed even sharper operating leverage.

Q4 FY26 consolidated revenue jumped to ₹1,630 crore from ₹926 crore last year, while net profit rose to ₹795 crore from ₹494 crore. Full-year FY26 PAT stood at ₹2,487 crore versus ₹1,322 crore in FY25.

The most profitable segment for exchanges is usually derivatives.

Why?

Because one long-term investor buying a stock once a month generates limited fees.

An active options trader may generate hundreds of trades.

That’s why derivatives activity matters enormously for exchange profitability.

2️⃣ Why BSE is suddenly getting attention

For years, BSE struggled to compete with NSE in derivatives.

And in exchange businesses, liquidity matters a lot.

Traders naturally prefer the platform where volumes are already high because execution becomes smoother and spreads remain tighter.

That gave NSE a massive advantage.

But FY25 and FY26 changed the conversation.

BSE’s Sensex weekly options started gaining traction, especially after regulatory changes around weekly expiries. Its options premium turnover rose sharply, and on multiple expiry days, BSE’s share of options premium crossed 50%.

That matters because premium turnover drives actual exchange revenue far more than notional turnover.

BSE’s average daily premium turnover rose to nearly ₹15,325 crore/day during FY25 and early FY26, growing over 100% YoY based on exchange and broker-level industry data referenced in recent disclosures and market studies.

And the impact is visible in financials.

BSE’s FY26 consolidated total income rose to ₹5,148 crore from ₹3,236 crore in FY25. Profit before tax almost doubled to ₹3,299 crore. Earnings per share jumped from ₹32.18 to ₹60.61.

Its transaction charges also surged sharply because of rising derivatives activity.

What’s interesting is that expectations from BSE were extremely low for many years.

So when profitability starts improving rapidly in a business with strong operating leverage, the market re-rates the stock aggressively.

That explains a large part of BSE’s 78% move over the last year.

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3️⃣ NSE still remains a giant, investors should not underestimate

Even after BSE’s momentum, NSE remains India’s dominant exchange by a very wide margin.

Its market share in Q4 FY26 was:

• 93% in cash market
• Nearly 100% in equity futures
• 73% in equity options premium
• Nearly 100% in currency derivatives

That dominance creates a powerful network effect.

More liquidity attracts more traders.
More traders improve execution quality.
Better execution attracts even more liquidity.

This cycle becomes very difficult to disrupt.

NSE also has a much deeper institutional ecosystem.

Its colocation infrastructure, clearing systems, institutional participation, and algorithmic trading stack remain significantly ahead.

And unlike BSE, NSE is also far more diversified.

In FY26:

• Transaction charges contributed ₹13,057 crore
• Data connectivity revenue crossed ₹1,129 crore
• Data centre revenue grew 33% YoY
• Index licensing revenue grew 26% YoY

That matters because exchanges eventually become infrastructure businesses, not only trading venues.

NSE’s total FY26 PAT came in at ₹10,302 crore with ROE at 33%. Even after a softer year due to regulatory changes in derivatives, it remained one of the most profitable financial infrastructure businesses in India.

And then there’s the IPO angle.

NSE’s expected listing in early 2026 is already one of the biggest discussions in Indian markets.

For many investors, it represents a direct way to participate in India’s long-term financialisation story.

4️⃣ The bigger theme: India’s financialisation boom

The larger opportunity may not simply be “BSE vs NSE.”

It may be the scale of growth happening in Indian investing itself.

NSE now has nearly 25.7 crore investor accounts registered and around 13 crore unique investors. It also covers 99.9% of India’s pin codes.

Retail participation in derivatives has exploded over the last few years.

Monthly F&O participants on NSE crossed 3.3 million in April 2025, while participation from Tier-2 and Tier-3 cities continues rising rapidly.

India’s equity culture is expanding beyond metros.

SIP inflows continue hitting record levels.
Demat accounts continue growing.
IPO participation has deepened significantly.

And exchanges sit at the center of all of this activity.

That’s why investors globally often assign premium valuations to exchange businesses.

They are asset-light.
Margins remain high.
Cash generation is strong.
And revenues compound as market participation increases.

But risks matter too.

A large portion of recent derivatives growth came from retail options activity.

SEBI has already tightened regulations around weekly expiries and retail F&O participation.

In fact, NSE’s FY26 PAT declined 15% YoY partly because of regulatory changes impacting derivatives activity.

That means investors should separate structural growth from temporary volume spikes.

5️⃣ So where does the bigger opportunity lie?

Right now, BSE offers the stronger rerating story.

NSE offers the stronger dominant-platform story.

BSE’s opportunity depends on sustaining derivatives momentum and continuing to gain relevance in options trading.

NSE’s opportunity comes from defending leadership while compounding alongside India’s financial growth.

And the broader trend still remains powerful.

India’s investment participation is still relatively low compared to developed markets.
- Retail activity continues rising.
- Capital markets are becoming more mainstream.
- And exchanges remain one of the cleanest ways to participate in that shift.

The real debate now is no longer about survival.

It is about who captures the next phase of India’s investing boom more efficiently.

Closing Thought

Stock exchanges rarely become headline businesses during normal periods.

But as financial systems deepen, exchanges slowly become the infrastructure layer behind wealth creation itself.

India may now be entering that phase.

And that’s exactly why the market is paying much closer attention to BSE and NSE today.

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For many investors, this was their first real introduction to global investing through a mutual fund.

While most AMCs focused on launching multiple schemes and chasing categories, PPFAS built trust around a simpler idea: own good businesses, hold them for a long time, and invest globally when valuations make sense.

That approach worked.

From nearly ₹10,000 crore of AUM in 2020, PPFAS Mutual Fund now manages around ₹1.54 lakh crore, making it one of the most respected names in Indian mutual funds.

But scale changes the conversation.

Once an AMC crosses ₹1 lakh crore, the discussion moves beyond fund performance and into business quality, valuation, and the ability to keep compounding.

The real question now is simple:

Can PPFAS still grow like before, and is the AMC business itself still an attractive opportunity?

What are we covering today

• Why AMC businesses are powerful
• Why PPFAS succeeded when many others did not
• What is changing inside PPFAS now
• PPFAS vs peers on valuation and business quality
• Is PPFAS still a strong long-term opportunity?

1. Why AMC businesses are so attractive

Asset Management Companies do not manufacture products.

They manage money.

Revenue comes from management fees charged on Assets Under Management (AUM). As AUM rises, fee income rises, but costs do not increase at the same pace.

That creates a strong business model:

• High operating leverage

• Strong free cash flow

• Low capital requirements

• High return on equity (ROE) and return on capital (ROCE)

Unlike banks, AMCs do not lend money. Unlike NBFCs, they do not need large balance sheets.

Trust and distribution are the real assets.

PPFAS shows this well.

In Q3 FY26, revenue stood at ₹169 crore, up 66% YoY, while PAT was ₹99 crore, also up 65% YoY. PAT margin stood at nearly 58%, and FY25 EBITDA margin was close to 80%.

That is why quality AMC businesses often trade at premium valuations.

In asset management, reputation compounds faster than capital.

2. Why PPFAS succeeded

PPFAS built its identity around one flagship strategy instead of launching many products early.

That flagship was the Parag Parikh Flexi Cap Fund.

Even today, that single scheme manages nearly ₹1.34 lakh crore, which is almost 87% of total AUM.

The biggest differentiator was global investing.

Before international diversification became common, PPFAS was already allocating meaningfully to companies like Alphabet (9.3%), Meta (~5%), Amazon, and Microsoft.

Its overseas allocation once reached nearly 30%, far ahead of most Indian AMCs. Even after regulatory limits from SEBI and RBI, overseas exposure remains around 17–20%.

This gave investors:

• Better diversification

• Stronger long-term performance

• Lower dependence on only Indian markets

• Clear brand recall

The expense ratio also stayed low. The Flexi Cap Fund runs at around 0.62%, which supported investor trust further.

PPFAS built the image of an investing house, not a product-selling machine.

That made all the difference.

3. What is changing now

Crossing ₹1 lakh crore changes everything.

A ₹5,000 crore inflow means one thing when AUM is ₹10,000 crore and something very different when AUM is ₹1.5 lakh crore.

Growth naturally slows at scale.

That is visible now.

PPFAS has started expanding beyond its flagship identity.

Recent launches include:

• ELSS Tax Saver Fund with ₹5,720 crore

• Large Cap Fund

• Conservative Hybrid Fund

• Arbitrage Fund

• Dynamic Asset Allocation Fund

• Liquid Fund

This helps diversify revenue, but it also changes the original narrative of simplicity and focus.

Another challenge is global investing restrictions.

The overseas investment cap introduced by regulators reduced the flexibility PPFAS once had in international allocation. One of its strongest historical advantages became harder to scale.

Cash holdings have also increased at times as fund size creates portfolio flexibility limits.

PPFAS is moving from a concentrated conviction story to a broader AMC platform story.

That transition matters.

4. AMC economics + Valuation

PPFAS may look expensive if you only see the P/E.

Its P/E is around 56x, compared with:

• ICICI Prudential Asset Management Company: ~49x

• HDFC Asset Management Company: ~41x

• Nippon Life India Asset Management: ~43x

At first glance, it does not look cheap.

But AMC’s valuation is rarely judged only by earnings.

Investors track:

• Equity AUM quality

• SIP stickiness

• Redemption behavior

• Operating margins

• Fund performance consistency

• Revenue per ₹100 of AUM

PPFAS has nearly 95% equity AUM, which is far more valuable than temporary debt flows.

Its investor base is largely retail and sticky, with strong SIP participation and lower redemption pressure during corrections.

FY25 PAT margin of 57–58% is comparable to larger peers and close to HDFC AMC’s 60.8%.

Its market cap to AUM ratio is around 9.5%, close to Nippon AMC at 9.1%, while HDFC AMC trades much richer at 14.3%.

Recent AMC listings also show how the market values quality asset managers.

ICICI Prudential Asset Management Co. Ltd. was listed on 19 December 2025 through a pure Offer for Sale (OFS) of nearly ₹10,603 crore. The stock is listed at nearly a 20% premium over its issue price of ₹2,165, showing strong investor demand for established AMC businesses.

Canara Robeco Asset Management Co. Ltd. also came to market in October 2025, with an IPO size of around ₹1,326 crore and an issue price band of ₹253–₹266 per share.

These listings show a clear pattern: investors are willing to pay premium valuations for AMCs that have strong brands, sticky equity AUM, and predictable cash flows.

That is why PPFAS continues to attract attention even at a higher multiple.

In AMC businesses, the quality of AUM matters more than the quantity of AUM.

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5. Is PPFAS still a strong opportunity?

The easy growth phase may be behind.

The next phase depends on execution.

• Can they scale beyond one flagship fund?

• Can new launches build the same trust?

• Can global investing remain part of the edge despite regulatory limits?

Those are the real questions.

Why investors still remain interested:

• Strong brand trust

• Retail-heavy loyal investor base

• Scalable, high-margin business model

• Rising long-term equity participation in India

• Increasing appetite for global diversification

Why caution matters:

• Growth slows at larger scale

• New funds need time to prove themselves

• Premium valuations leave less room for mistakes

PPFAS may not be a fast rerating story from here.

But it still remains one of the cleaner compounding stories in Indian financial services.

Sometimes the best businesses are the ones that look simple from the outside.

PPFAS is one of them.

A disciplined investment philosophy built one great fund.

Now the market is watching if that same discipline can build a much larger AMC platform.

That answer will shape the next decade.

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Many observers now believe the worst phase of the immediate conflict may be behind us. But even when headlines cool, the financial effects do not disappear overnight.

Petrol prices, gold rates, inflation, rupee pressure, and market sentiment can continue reacting long after the first shock passes.

That is why the bigger story is not only about conflict. It is about how one narrow shipping route can still influence your portfolio from thousands of kilometres away.

What are we covering today

• Why the Strait of Hormuz matters

• What is happening right now

• Why oil, gold, and silver are reacting differently

• What this means for Indian investors

• Is it time to act or wait?

1. Why the Strait of Hormuz matters

The Strait of Hormuz is a narrow sea route between the Persian Gulf and the Gulf of Oman.

In normal periods, around 20 million barrels of oil per day pass through it. That is close to 20% of global oil trade. Several major producers rely on this route, including Saudi Arabia, Iraq, UAE, Kuwait and Iran.

When traders fear disruption here, oil prices can rise before any actual shortage appears.

And oil feeds into the wider economy through:

• Transport costs

• Manufacturing costs

• Inflation

• Interest rates

• Corporate profits

Recent shipping data shows how sensitive markets are:

• Traffic reportedly down 95%+ since late February

• Only 279 ships crossed by April 12 versus a usual ~100 daily

• 150+ tankers anchored nearby

• VLCC freight rates above $423,000/day on Middle East to China routes

Key takeaway

Markets often react to supply risk first, physical shortages later.

2. What is happening right now

The last 24 hours explain the current volatility.

There were attempts to reopen the route for managed passage on April 17. Oil prices then cooled sharply. Soon after, re-closure threats returned and vessels reportedly faced fresh restrictions.

At the same time:

• U.S.-Iran tensions remain active

• Maritime controls are still in focus

• Negotiations continue

• Progress appears limited

• Headlines are changing by the hour

Markets dislike contradictory signals. One update points to diplomacy. The next points to escalation.

That creates uncertainty even when benchmark prices stay below panic levels.

Key takeaway

The immediate risk is rapid headline reversals, not only military action.

3. Why oil, gold and silver are reacting differently

Crude Oil

Brent crude touched $108.78/bbl in mid-March and is now around $83.8/bbl. That is a fall of roughly 23%.

India’s crude basket touched $157.04/bbl on March 23 and is now near $110/bbl, down about 30% from the peak.

Oil staying below earlier highs suggests traders believe:

• Alternative supply can respond

• Strategic reserves may be used

• Full disruption may be temporary

• Non-OPEC production remains strong

Gold

Gold in India has hovered near ₹1,52,604 per 10g recently. It remains elevated on a yearly basis, though it has cooled in the short term.

Gold usually benefits when investors want safety during uncertainty.

Silver

Silver has outperformed, with the gold-silver ratio near 59.8. Silver responds to caution, but also to industrial demand because it is widely used in solar panels, electronics and manufacturing.

Key takeaway

• Oil prices supply risk

• Gold prices caution

• Silver prices caution + growth expectations

That is why they can move differently at the same time.

4. What this means for Indian investors

India imports 85%+ of its crude needs. That makes oil moves highly relevant for households and portfolios.

Inflation

Higher crude prices can lift fuel, freight and packaging costs. Those costs can reach consumers over the next 1 to 3 months.

Rupee

India’s annual oil import bill is nearing $180 billion. If prices stay high, estimates suggest the bill could rise by another $70 billion in 2026.

That increases dollar demand and can pressure INR. The rupee had already moved past ₹92/USD during earlier spikes.

Equity Markets

Some sectors may face pressure:

• Airlines

• Paints

• Logistics

• Consumption-heavy businesses

Some may hold up better:

• Energy producers

• Exporters if INR weakens

• Defensive sectors during uncertainty

Rates and Valuations

If inflation rises again, central banks may remain tighter for longer. That can weigh on expensive valuations.

Key takeaway

For Indian investors, Hormuz can influence inflation, currency, and sector returns.

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5. Is it time to act or wait?

Geopolitical events are difficult to trade consistently. Prices can reverse in a single session.

A steadier approach is portfolio discipline.

Practical view

• Avoid concentrated bets based only on headlines

• Review sectors sensitive to sustained high oil

• Keep some diversification through gold, global exposure, or strong businesses

• Use volatility to rebalance, not react emotionally

Scenario view

If tensions ease:
Oil may cool, equities may recover, and gold may soften.

If tensions worsen:
Oil may rise, gold may strengthen, volatility may increase.

Closing Thought

The Strait of Hormuz is a narrow route with a large financial impact.

You do not need to predict every headline.

But understanding how oil, metals and markets respond can help you make better decisions when markets turn emotional.

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BSE Ltd is up nearly 40%, while the Nifty 50 is down around 5%.

For many investors, BSE is simply the exchange linked to the Sensex. But as a listed business, it earns from trading activity, listings, clearing, data services, and market participation.

That naturally leads to a bigger question.

If BSE has already rerated sharply, where does the better opportunity sit now: BSE or NSE?

What are we covering today

• What BSE actually does

• Why BSE has outperformed the Nifty

• What NSE and MSEI tell us about the exchange industry

• BSE vs NSE valuations

• Is NSE the better opportunity now?

1. What BSE actually is

BSE is an exchange business. It operates the marketplace where buyers and sellers transact in shares, derivatives, ETFs, mutual funds, and other products.

Its revenue comes from several sources:

• Equity trading fees

• Derivatives trading fees

• IPO and listing charges

• Market data subscriptions

• Clearing and settlement income

• Technology services

This business model has an attractive feature.

Once the platform and infrastructure are built, additional transactions usually come at limited extra cost. That means higher volumes can push profits up faster than expenses.

And India’s participation in markets is rising.

• Demat accounts have crossed 22 crore+

• SIP inflows have moved into the ₹26,000 to ₹32,000 crore per month range

• Retail activity in equities and derivatives remains strong

The result is simple: exchange businesses benefit when more Indians participate in investing.

2. Why BSE is up 40% while Nifty is down

BSE’s rally is tied to business momentum, not price action alone.

Derivatives growth

The biggest driver has been derivatives, especially Sensex-linked contracts.

BSE’s average daily F&O premium turnover has risen from roughly ₹935 crore/day at the end of 2023 to around ₹19,459 crore/day by late 2025. That is growth of over 1,900%.

Its options-premium market share is estimated to have moved from around 19% to near 30% over this period.

For exchange businesses, even a few percentage points of market-share gain can have a large impact on profits.

Earnings growth

The underlying numbers have improved sharply:

• FY25 total income rose to around ₹3,236 crore

• Net profit rose to roughly ₹1,322 crore

• Profit has multiplied versus earlier years

Scarcity premium

There are very few listed pure-play exchange businesses in India. When investors want exposure to India’s financialization theme, BSE becomes a visible option.

That explains why the stock has rerated so strongly.

3. NSE, MSEI and the bigger market structure

BSE’s rise is important, but India’s exchange story is larger than one company.

NSE today

NSE remains the dominant player.

It continues to hold roughly:

• 90%+ share in cash equities

• 80%+ share in key derivatives segments

Its strength comes from liquidity. In markets, participants usually go where trading activity is deepest. That tends to attract even more activity.

This creates a strong competitive moat.

MSEI angle

Even smaller exchanges are seeing traction.

MSEI has crossed around ₹1,000 crore in equity trading value as an exchange in April 2026.

That is still modest compared to BSE and NSE, but it shows a broader point: India’s capital-market ecosystem is expanding.

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4. BSE vs NSE valuations

This is where the comparison gets interesting.

Current indications:

• BSE P/E: ~61x

• NSE Pre-IPO P/E: ~38x

• NSE market share: ~90% in major segments

So the smaller exchange is trading at a higher earnings multiple than the dominant one.

Why can that happen?

• BSE is already listed and easy to access

• Recent momentum attracts attention

• BSE is gaining share from a smaller base

• NSE still carries IPO timing and regulatory uncertainty

• Private markets can price inefficiently for periods

Markets do not always price scale and quality in a straight line.

Sometimes, access, momentum, and narrative drive valuations first.

5. Is NSE the better opportunity now?

Based on current estimates:

• Expected IPO size: ₹20,000 to ₹25,000 crore

• Likely dilution: around 5%

• Implied valuation: close to ₹5 lakh crore

• Estimated value per share: around ₹2,020

• Current Pre-IPO price (11 April 2026): ₹1,880

That suggests current pricing may still be reasonable.

Why investors are paying attention:

• Dominant market position

• Strong margins and cash generation

• Network effects (users attract users)

• IPO visibility can unlock wider participation

At the same time, risks remain:

• IPO delays

• Regulatory developments

• Valuation already partly recognized

Closing Thought

BSE’s rally tells us investors value exchange businesses highly.

But when price runs ahead, the next question becomes where value sits now.

For many investors, that conversation is moving toward NSE.

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It recently touched ~₹93 against the dollar. That shows up quickly in daily life. Imports feel expensive. Travel costs more. Subscriptions priced in dollars move higher.

There’s a second layer to this.

When your currency weakens, your wealth becomes more local.

Most portfolios in India are heavily tied to one economy and one currency. That works well when everything is moving in your favour. It becomes limiting when it is not.

The question is not whether India will grow.
It’s whether your portfolio should depend only on that growth.

What are we covering today

1. Why the rupee matters for your investments

2. A quick note on global investing

3. What’s happening in China right now

4. Where the opportunity actually is

5. Is this the right time to invest

1. Why the rupee matters

The rupee has depreciated ~6.7% over the last year, moving from ~₹86.7 to ~₹92.7 per dollar. At one point, it even crossed ₹95.

This is not unusual. Over long periods, INR has weakened by ~1–2% annually.

There are structural reasons:

• India imports large volumes of oil and electronics

• That creates a steady demand for dollars

For an investor, the implication is simple.

If your portfolio is entirely in INR assets, your purchasing power stays tied to one currency.

Even if Indian markets deliver 10–12% returns, a weaker currency reduces how that wealth translates globally.

Currency does not show up daily in your portfolio. But over time, it shapes outcomes.

2. Global investing (quick note)

Adding global exposure changes two things:

• It diversifies currency risk

• It adds exposure to different growth cycles

The US led the last decade. That does not stay constant.

Leadership rotates across regions over time.

The next question is where the next opportunity might be forming.
That brings us to China.

3. What’s happening in China

Chinese markets have gone through a deep correction.

The MSCI China Index fell:

• ~30% in 2021

• ~31% in 2022

• ~33% in 2023

That is a significant reset in valuations.

The reason lies largely in the property market.

• Nearly 70% of household wealth is linked to real estate

• Around 90% of cities saw price declines earlier

• Even in early 2026, prices across 70 cities remain mixed

This affected consumption.

Recent data shows:

• Retail sales growth at ~2.8% (Jan–Feb 2026)

• Youth unemployment at ~16.1%, though improving

At the same time, another part of the economy is moving differently.

• Industrial production grew ~6.3%

• Exports remain strong

• Trade surplus is elevated

China is leaning more toward:

• Manufacturing

• Technology

• Export-driven sectors

Policy direction supports this:

• AI and semiconductors

• Electric vehicles

• Green energy

• Advanced manufacturing

Capital is responding to this shift.

Stock Connect inflows reached ~RMB 302.7 billion in February 2026, with flows concentrated in tech, semiconductors, and healthcare.

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4. Where the opportunity actually is

After a three-year correction, valuations have adjusted.

• MSCI China trades at ~13x forward earnings

• MSCI Emerging Markets ~15x

• US markets ~21x

That gap reflects lower expectations.

There is also a currency layer.

• INR has weakened faster than the Chinese yuan

• CNY/INR moved ~12.7% over the past year

This means even stable Chinese assets can add to returns in INR terms.

But the opportunity is not broad.

• Real estate continues to face pressure

• Consumption recovery is gradual

Market attention is centred on:

• Technology and semiconductors

• Industrial and manufacturing companies

• Export-linked sectors

In China, policy direction and market performance tend to move together.

The current policy focus is on domestic capability, innovation, and industrial scale.

5. Is this the right time to invest?

China today is a transitioning economy.

Growth is slower, around ~4.5–5%. Demand is uneven. Policy decisions play a larger role.

There are risks:

• Policy unpredictability

• Geopolitical tensions

• Weak domestic consumption

At the same time:

• Valuations have corrected after a multi-year decline

• Capital flows are gradually returning

• Sector leadership is becoming clearer

For investors, the approach needs to be measured.

• Broad exposure may not work

• Sector selection matters

• Allocation size matters

China fits better as a part of a diversified global portfolio rather than a standalone bet.

Closing thought

For a long time, China’s growth looked predictable.

Now it is more selective, more policy-driven, and more complex.

That makes it harder to read.

It also makes it relevant to track.

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All three are tied to one variable.

Oil sits at the intersection of geopolitics, economies, and your everyday expenses. With the current conflict raging in the Middle East, this is more important than ever.

The real question is not where oil prices go next.
It’s how changes in oil ripple through your money.

What are we covering today?

1. Why oil still matters

2. What’s different this time

3. India’s position in the system

4. How oil flows into your portfolio

5. Is this the right time to act

1. Why oil still matters

Oil still accounts for ~30% of global energy use. In transport, dependence is close to 90%.

It feeds into:

• Transport and logistics

• Chemicals and plastics

• Fertilizers and agriculture

When oil prices move, costs move across sectors.

In India, a $ 10-per-barrel increase can push inflation up by 35–40 basis points. It can also widen the current account deficit by ~0.4% of GDP.

That sets off a chain reaction:

• Inflation rises

• Central banks hold rates higher

• Borrowing costs increase

• Equity valuations adjust

Even small moves in oil tend to have large economic effects.

2. What’s different this time

In the 1970s, the oil supply was concentrated. A few countries controlled most of the output.

Today, supply is more spread out:

• The US produces ~14% of global oil

• Saudi Arabia and Russia ~10% each

• Others, like Canada, Iraq, and China, contribute 4–5%

There are buffers:

• Strategic reserves

• A broader energy mix including gas, nuclear, and renewables

But the system is not fully stable.

What’s driving oil today:

• Ongoing geopolitical tensions

• Supply discipline from OPEC+

• Lower investment in oil exploration over the last decade

• Energy transition is creating uneven supply visibility

Oil shocks today may not be as extreme as those of the 1970s. They tend to occur more often and are harder to predict.

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3. India’s position

India imports ~85–89% of its crude oil.

This reflects in key numbers:

• Oil accounts for ~25–30% of total imports

• It contributes 40–50% of the trade deficit in high-price periods

• The annual oil import bill is around $120–140 billion

A $10 increase in oil prices can push the current account deficit toward 2.5–2.7% of GDP.

There is another layer.

India manages sourcing actively:

• Russian crude reached ~40% of imports, now closer to ~35%

• The Middle East share has moved above ~50%

This helps in pricing:

• Brent around $80–90

• India’s basket is around ~$72–77

• Russian crude earlier traded at large discounts

This reduces the effective cost by 10–15%.

There are buffers:

• ~74 days of oil coverage (reserves + commercial stocks)

• Strategic reserves account for ~5 days

Even with this, oil remains one of the biggest variables for:

• Inflation

• Currency

• Fiscal balance

4. How oil flows into your portfolio

Oil affects multiple parts of the market simultaneously.

1. Inflation and interest rates

Higher oil → higher inflation → tighter RBI stance

This affects:

• Bank credit cycles

• Equity valuations, especially rate-sensitive sectors

2. Corporate margins

Fuel and crude derivatives form a major cost:

• Airlines: 30–40% of total costs

• Paints and FMCG: raw materials and logistics

A $10 increase in oil prices can reduce airline margins by 1–2% and materially impact earnings.

3. Winners and losers

• Upstream companies benefit when crude prices rise

• Refiners benefit when margins expand

India’s refiners illustrate this:

• IOC GRMs at ~$12.2 per barrel, up ~4x YoY

• BPCL around ~$13.3 per barrel, up ~2x

India exports refined products, so margins play a key role along with crude prices.

4. Currency impact

India imports roughly $130 billion worth of oil annually.

Higher oil → higher dollar demand → pressure on the rupee

A $10 rise in oil can weaken INR by ~1–2% in the short term.

This affects:

• Import-heavy sectors negatively

• Exporters like IT more favourably

5. Logistics and supply risks

Around 20% of global oil passes through the Strait of Hormuz.

Even without supply cuts:

• Shipping insurance costs have risen 20–50% in recent tensions

• Rerouting adds cost and delays

This can push oil prices up 10–20% without an actual shortage.

5. Is this the right time to act?

Oil has always been cyclical.

Prices move based on supply decisions, demand cycles, and geopolitical events. Predicting these consistently is difficult.

Even experts find it hard to make sustained moves.

A more practical approach:

• Track how sensitive your portfolio is to oil

• Avoid heavy exposure to sectors that get hit by sustained high oil

• Focus on businesses that can pass on costs or benefit from the cycle

Oil works better as a lens to understand risk rather than a direct trading idea.

Closing thought

In the 1970s, oil reshaped entire industries.

Today, the impact is spread across:

• Inflation

• Policy decisions

• Currency movement

• Everyday costs

You don’t need to predict oil prices.

But understanding how oil moves through the system can change how you read markets.

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That context is beginning to change.

Over the last few years, there has been a consistent build-up across policy decisions, budget allocations, and domestic manufacturing capabilities. None of this has happened suddenly, but the direction is becoming clearer with every passing year.

Spending is rising, but more importantly, where that money is going is starting to shift. Domestic production is scaling, exports are gaining traction, and order books are expanding with better visibility.

It is not a noisy theme yet, but the underlying numbers are beginning to reflect a sector that is gradually moving into a more meaningful position within the broader economy.

What are we covering today:

1️⃣ What is happening right now
2️⃣ Why defence is back in focus globally
3️⃣Why this time feels different
4️⃣Where the real money is made
5️⃣What this means for you
6️⃣ Is this the right time

1️⃣ What is happening right now?

India is steadily increasing its defence focus.

The defence budget has grown from ₹4.85 lakh crore in FY21 to around ₹6.8 lakh crore for FY26, with projections closer to ₹7.85 lakh crore by FY27. Over the next 4–5 years, total planned spend is expected to cross $500 billion.

But the quality of spending matters more than the size.

Out of ₹6.8 lakh crore:
₹1.8 lakh crore goes into capital expenditure, which funds new equipment
₹4.7 lakh crore is spent on salaries and pensions

That means only about 26% is directly creating future growth for defence companies.

At the same time, production has scaled from ₹74,000 crore to ₹1.5 lakh crore, and exports have risen from ₹1,500 crore to ₹23,600 crore, reaching over 90 countries.

👉 Defence is gradually moving from a budget line item to a long-term national priority.

2️⃣ Why defence is back in focus globally

Global military spending has reached $2.71 trillion in 2024, up about 9.4% in a single year. Over the last three years alone, spending has increased by nearly 20%, now accounting for roughly 2.5% of global GDP.

This rise is not limited to one region. It is broad-based.

The United States continues to spend about $880–900 billion annually. NATO countries have increased defence spending by nearly 50% over the last decade, with more than 20 members now meeting the 2% of GDP benchmark. China’s military budget stands around $240–260 billion with steady annual growth, while several Middle Eastern nations are allocating between 4–8% of GDP to defence.

India fits into this larger pattern. Its defence budget stands at ₹6.81 lakh crore for FY26, growing about 9.5% year-on-year, and holding steady at around 1.9% of GDP.

What stands out is how India is positioning itself within this system.

Defence exports have expanded from under ₹1,000 crore a decade ago to ₹23,622 crore in FY25, reaching over 90 countries. Over the last five years alone, this has compounded at roughly 40–45% annually. The next milestone stands at ₹50,000 crore.

At the same time, domestic manufacturing has strengthened. Around 65–75% of procurement is now sourced locally, compared to heavy import dependence earlier. Each 10% shift toward domestic sourcing translates into ₹15,000–20,000 crore of additional opportunity for Indian companies.

👉 Defence demand is expanding globally, and India is positioning itself within that supply chain.

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3️⃣ Why this time feels different

There are three forces shaping this space.

First, global rearmament.

Spending is no longer reactive. It is planned over the years. India’s own military spending stands at about $86 billion, growing consistently for over a decade. It now accounts for roughly 13% of the Union Budget.

Second, localisation.

Domestic procurement has increased from 58% in FY20 to around 75% in FY25. Imports have dropped to nearly 22–23%. With over 5,000 items restricted from imports, each 10% shift toward local sourcing translates into ₹20,000 crore of additional opportunity for Indian companies.

Third, exports.

Exports have expanded from ₹686 crore in FY21 to ₹23,622 crore in FY25, nearly 30x growth. The next target stands at ₹50,000 crore.

👉 Policy direction is clear. A larger share of defence spending is staying within the country.

4️⃣ Where the real money is made

Defence businesses operate differently from most sectors.

Growth is driven by large orders and long execution cycles.

Over the last three years, ₹3.8 lakh crore worth of deals have been cleared. Order books reflect this visibility:

• HAL: ~₹1.2 lakh crore, offering 4–5 years of revenue visibility

• BEL: ~₹76,000 crore

• BDL: ~₹22,000 crore

In many cases, order books are 3–5 times annual revenue. That means a significant part of future income is already contracted.

Execution is the key variable.

Projects typically take 3–7 years to complete. Delays of 2–3 years after approvals are common. Around 8–10% of capital budgets remain unspent annually, which affects timelines.

Sub-segments show a clear concentration of opportunity:

• Aerospace: ₹4.3 lakh crore pipeline

• Shipbuilding: ₹3.2 lakh crore

• Missiles and artillery: ₹1.8 lakh crore

• Defence electronics: ₹1 lakh crore, with some of the fastest growth

Margins are improving for companies investing in technology. R&D spending is rising, with DRDO at ₹28,500 crore and leading companies allocating 4–7% of revenue.

👉 The next phase depends on how efficiently companies execute, not just how many orders they win.

5️⃣ What does this mean for you?

If you already own defence stocks:

You are part of a sector backed by policy and long-term spending. Order visibility is strong, but valuations in some cases reflect that optimism.

Tracking execution becomes important. Delivery timelines, margins, and cash flows matter more than announcements.

If you are not invested:

The sector operates on longer cycles. Sharp rallies can be followed by phases of consolidation.

Watching export growth, order execution, and margin trends gives better entry signals than short-term price movements.

A reasonable allocation for most portfolios could fall in the 3–7% range, depending on risk appetite.

Defence also plays a distinct role.

It combines earnings growth with some protection during geopolitical stress, which makes it behave differently from typical sectors.

6️⃣ So… is this the right time?

There is clear visibility on demand.

Global spending is at record levels. India has a pipeline of nearly ₹9 lakh crore. Exports are scaling, and domestic manufacturing continues to gain share.

At the same time, a few uncertainties remain.

Execution timelines are long. Margins depend on efficiency. Export scaling will take time to stabilise.

Valuations in certain companies are already elevated, with some trading near 40–45x earnings while growing at 20–25%.

The opportunity sits in the combination of policy support, long-term demand, and improving capability.

The risk comes from overpaying or misjudging execution timelines.

A balanced approach works better here than aggressive positioning.

Defence is steadily becoming part of India’s industrial base. For investors, the focus should stay on companies that can convert strong order books into consistent execution over time.

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Over the past few weeks, the conflict in West Asia has begun to do exactly that. Oil prices have moved sharply, global equity markets have turned volatile, and investors across the world are reassessing risk.

For Indian investors, the connection is direct. India imports a large share of its energy, and movements in oil prices tend to ripple across inflation, currency, and equity markets.

So the right question is not simply what is happening geopolitically.
The more useful question is how these developments translate into economic outcomes and investment decisions.

What we’re covering today

1️⃣ What has happened so far, and what history tells us
2️⃣ Impact on the global economy
3️⃣ Which sectors are getting affected negatively
4️⃣ How you can structure your portfolio
5️⃣ Why periods like this can create opportunities

1. What has happened thus far - and what history tells us

The current escalation in West Asia has brought several major economies into a tense geopolitical phase.

Energy markets reacted almost immediately. Brent crude moved above $100 per barrel, rising more than 9% in a single session as supply concerns spread across global markets.

Equity markets followed. On the same day, the S&P 500 fell 1.5%, the Dow dropped 739 points, and the Nasdaq declined 1.8% as investors moved toward safer assets.

The reaction pattern is not new.

Markets have experienced similar episodes many times:

• Gulf War in 1990

• Iraq War in 2003

• Russia–Ukraine conflict in 2022

• Oil embargo during the 1970s

Across these events, a fairly consistent sequence tends to appear.

Stage 1: Shock

Prices fall quickly because investors cannot estimate the economic impact.

Stage 2: Information phase

Markets start processing new information. Oil prices, supply chains, and trade flows become the main focus.

Stage 3: Stabilisation

Volatility gradually reduces once the economic consequences become clearer.

One interesting observation from historical data is that equity markets often stabilise before conflicts fully resolve.

Financial markets respond to expectations. Once investors can estimate the economic damage, uncertainty reduces, and volatility tends to decline.

2. Impact on the global economy

Wars influence the economy through a few predictable transmission channels.

Energy and commodities

Energy markets respond first.

Nearly 20% of global oil trade passes through the Strait of Hormuz, one of the most sensitive energy routes in the world.

Any disruption in this corridor immediately affects global supply expectations.

For India, the exposure is significant.

India imports about 88–90% of its crude oil requirements, making it one of the most energy-dependent large economies.

Economic sensitivity is measurable.

Research from HDFC Bank estimates that every 10% increase in oil prices can reduce India’s GDP growth by around 20 to 25 basis points.

Higher oil prices usually translate into:

• Higher inflation
• Higher transportation costs
• Pressure on manufacturing margins

Trade and supply chains

Wars rarely affect only the countries involved.

Sanctions, shipping disruptions, and insurance costs can slow global trade.

For example, energy shipments from the Middle East often pass through narrow maritime routes. If shipping risk rises, freight costs and delivery times increase.

This leads to a familiar chain reaction:

Energy cost ↑
Transport cost ↑
Input cost ↑
Consumer prices ↑

Capital flows and investor behaviour

During geopolitical stress, global investors usually shift capital toward perceived safety.

Typical destinations include:

• US Dollar
• US government bonds
• Gold

Emerging markets sometimes see capital outflows during these phases, which can create volatility in currencies and equities.

That is why even distant geopolitical conflicts can influence domestic markets.

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3. Which sectors are getting affected negatively?

The impact of energy shocks usually appears uneven across industries.

Most vulnerable

Airlines

Fuel can account for 30–40% of operating costs for many airlines. Rising crude prices directly pressure margins.

Logistics and shipping

Fuel costs rise alongside insurance and freight charges.

Chemicals and fertilisers

Many chemical processes depend on petroleum-linked feedstocks. Input costs tend to increase when oil prices rise.

Consumer discretionary

Higher inflation reduces household purchasing power, affecting demand for non-essential spending.

Moderately impacted

IT services

Global clients may delay discretionary technology spending during uncertain economic periods.

Export-oriented manufacturing

Currency movements and slower global demand can affect order flows.

Historically more resilient

Some sectors show relative resilience during geopolitical stress.

Examples include:

• Energy producers
• Defence companies
• Utilities
• Commodity producers
• Gold-linked assets

These industries often benefit from higher commodity prices or increased government spending.

4. How can you structure your portfolio?

Periods like this require balance rather than dramatic shifts.

A practical portfolio structure can be thought of in three layers.

Layer 1 - Stability

Assets that reduce volatility.

Examples include:

• Large-cap companies
• Dividend-paying businesses
• Defensive sectors such as utilities
• Gold allocation

These assets tend to hold up better during market stress.

Layer 2 - Inflation protection

Commodity shocks often create inflationary pressure.

Businesses that produce energy, metals, or infrastructure services sometimes benefit from higher input prices.

Examples include:

• Energy producers
• Commodity companies
• Infrastructure firms linked to raw materials

Layer 3 - Long-term growth

Geopolitical tensions do not stop structural economic trends.

India continues to see strong momentum in:

• Digital economy
• Manufacturing expansion
• Domestic consumption
• Technology services

Maintaining exposure to long-term growth themes remains important even during volatile periods.

A simple allocation framework that many investors follow:

Stability assets → 40–50%
Growth assets → 35–45%
Tactical opportunities → 10–20%

Exact allocation depends on risk tolerance and investment horizon.

5. Why this period may create opportunities

Financial markets often react strongly to uncertainty.

During geopolitical shocks, investors demand higher returns to compensate for risk. This expands the risk premium, which usually leads to lower equity valuations in the short term.

History shows this pattern repeatedly.

Markets corrected during:

• Gulf War (1990)
• Iraq invasion (2003)
• Russia–Ukraine conflict (2022)

In many cases, equities stabilised once economic visibility improved.

For patient investors, these phases sometimes allow the accumulation of strong businesses at more reasonable valuations.

The key is discipline and gradual allocation rather than short-term reactions.

Final thoughts

Geopolitical events create uncertainty, but markets have experienced similar episodes many times.

For India, the primary economic channel remains energy prices. With nearly 90% crude import dependence, movements in global oil markets will continue to influence inflation, currency, and equity valuations.

Periods of volatility rarely feel comfortable while they are unfolding. Yet historically, they have often provided entry points for long-term investors willing to stay patient.

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Over the past few weeks, that comfort has been tested. Prices have corrected sharply. AI has moved from a distant theme to a boardroom priority. And investors are now asking a practical question. Has something structurally changed, or is this another cyclical correction?

Let us break it down calmly, with numbers.

What we’re covering today

1️⃣ What just happened
2️⃣ AI and the business model debate
3️⃣ What history tells us about IT corrections
4️⃣ What this means for your portfolio
5️⃣ Is this the right time to act

1️⃣ What just happened?

In February 2026, the Nifty IT index fell roughly 21 to 22% in a single month, the sharpest fall since 2008. From peak levels, the index is down over 25%, with more than $50 billion in market value erased

Revenue expectations have also cooled. Street estimates indicate only ~4% revenue growth for FY26, compared to the 10 to 15% growth phases seen in stronger cycles

To understand the reaction, we have to revisit how Indian IT earns money.

Most large IT firms generate revenue by billing clients based on:

• Number of engineers deployed

• Project size

• Duration of engagement

For two decades, scaling headcount supported revenue expansion. When demand improved, companies added engineers. That operating model worked well in a labour arbitrage-driven industry.

AI introduces a different dynamic. If productivity per engineer rises materially, clients may need fewer billable hours for the same output. That puts pressure on revenue intensity, even if client demand remains steady.

Importantly, margins have not collapsed. Balance sheets remain strong. What markets are reacting to is the uncertainty around how revenue growth behaves in an AI-heavy environment.

The debate is forward-looking.

2️⃣ AI and the business model debate

There are two structured views emerging.

The Concern

Some global broker reports estimate a 14 to 16% structural revenue deflation risk if AI materially improves coding and maintenance productivity. In simple terms, revenue per project could reduce because tasks get completed faster.

At the same time:

• US discretionary tech spending remains soft

• Clients are scrutinising IT budgets

• Large transformation deals have slowed

With FY26 revenue growth expected to be around 4%, valuation assumptions have naturally compressed.

The counter view

AI does not eliminate technology complexity. It often increases it.

AI systems still require:

• Integration with legacy infrastructure

• Data cleaning and governance

• Cybersecurity frameworks

• Ongoing model monitoring

Large Indian IT firms are already allocating capital here.

TCS is building a 100+ MW data centre to support advanced workloads.
Infosys has launched 225 GenAI programs across clients.
HCL Technologies has booked over $100 million in AI-linked services.

The larger question is pricing power. If companies gradually move from headcount billing to outcome-based or platform-linked pricing, margins may hold even with leaner teams.

That transition will determine the next phase of growth.

3️⃣ What history tells us about IT corrections

The sector has seen steep drawdowns before.

2008 global financial crisis
2016 digital transition
2022 post-pandemic slowdown

The pattern has been fairly consistent.

Growth visibility weakens.
Valuations compress.
Sentiment deteriorates.
Earnings stabilise over time.

Today, the sector trades at roughly 24x FY26 earnings, around 6% below its five year average. Dividend yield stands near 3.2%, compared to about 1.3% for the Nifty.

Large caps trade in the following range:

• Infosys around 17 to 18x

• TCS around 17 to 21x

• Wipro around 16 to 17x

• HCL Tech around 15 to 20x

Since 2006, Nifty IT earnings have compounded at approximately 11.9% CAGR, closely aligned with the index return CAGR of 12.1%. Over long periods, earnings growth has largely explained shareholder returns.

Current pricing implies long term growth expectations close to 3% for large IT firms. That assumption is meaningfully lower than historical earnings growth.

Sector weight in the Nifty is near decade lows, which suggests institutional positioning is not aggressive.

4️⃣ What does this mean for You?

This is where allocation discipline matters.

If you own IT stocks

Near-term expectations should be moderate:

• Low single-digit revenue growth

• Stable margins, but limited expansion

• Higher volatility around quarterly commentary

If exposure is already large, review position sizing. Additions, if any, are better staggered over time rather than concentrated.

If you do not own IT

Avoid reacting to sharp rebounds.

Track:

• AI-related deal wins converting into revenue

• Commentary on pricing models

• Improvement in US tech budgets

A gradual 3 to 5% allocation can make sense for investors comfortable with sector volatility, with scope to increase exposure as earnings visibility improves.

If you invest through Mutual Funds

Check how much IT exposure your diversified funds carry. Many large funds have already reduced overweight positions. Sector-specific funds remain tactical in nature and carry higher drawdown risk.

This phase is about portfolio positioning, not prediction.

If you would like help reviewing your IT exposure or structuring a staggered allocation plan, we are happy to assist.

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5️⃣ Is this the right time?

Let us separate facts from assumptions.

What we can observe:

• Sentiment is deeply negative

• Valuations are closer to long-term averages

• Earnings growth has slowed, but remains positive

• Balance sheets across large IT firms remain net cash positive

What remains uncertain:

• Speed of AI monetisation

• Stability of global tech budgets

• Long-term pricing structure

When expectations fall sharply, and fundamentals remain intact, risk-to-reward often improves. However, growth may remain moderate for some time if productivity gains outpace billing power.

Indian IT has navigated Y2K, the global financial crisis, cloud adoption, and multiple currency cycles. Adaptation has been part of its history.

The coming years will test management execution, capital allocation discipline, and pricing innovation.

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