Finacrest Wealth | Weekly Market Update 13-18th Oct
A resilient week for Indian markets amid global turbulence, robust festive demand, and evolving policy signals. Here’s how the week unfolded and where it leaves investors.
Executive Summary
- Indian equities ended the week higher, led by mid and large caps, even as global risk assets reeled from tariff headlines.
- Sector leadership rotated to Capital Markets and IT, with Healthcare and Real Estate firming up.
- Foreign investors returned as net buyers after a long hiatus, while domestic flows and festive demand stayed strong.
- Silver surged to multi-decade extremes with visible stress in physical markets and futures dislocations.
- Earnings season reinforced a “quality bifurcation” in IT services, while primary markets and policy activity remained active.
Global Backdrop: Shock, then Sorting
- Global markets saw a risk-off shock after fresh tariffs on China sent the S&P 500 down 2.7%, triggering selloffs in gold, silver, and crypto.
- The move was retaliation for China’s curbs on rare earth exports, heightening supply-chain concerns across industries from electronics to defence.
- Markets gradually recalibrated: short-term volatility gave way to a more measured view on growth and trade effects.
India Equities: Steady Hands Win
| Segment | Performance |
|---|---|
| Large & Mid Caps | ~1.5% gain – led the week |
| Small Caps | Flat |
| Sector Leaders | Bank ( +1.95% ), Auto (+1.90%), Fin Service (+2.59%), FMCG (+3%) |
| Flows | FIIs turned net buyers after 12 weeks, last week. Mixed flows in 13-18th Oct Week |
Macro Pulse: Festive Demand, Low Inflation, Supportive Policy
- Consumption surge: Record auto dispatches across cars, two-wheelers, and 3-wheelers. White goods volumes nearly doubled YoY for some retailers.
- Policy tailwinds: GST cuts and buoyant e-way bill generation confirmed tax pass-throughs. Retail inflation at an 8-year low strengthened the case for rate cuts.
- Growth dynamics: GDP prints solid but moderating sequentially; IMF raised FY26 India growth to 6.6% while flagging financial fragilities.
Spotlight: Silver’s Squeeze Turns Systemic
Silver extended its historic rally, trading above $50/oz and outpacing gold year-to-date. However, the rally has created structural stress.
| Stress Indicator | Market Signal |
|---|---|
| ETF Inflows | Multiple funds paused new investments due to physical shortage |
| ETF Pricing | Units trading at 15–18% premium to spot |
| Futures Market | Contracts trading at discount to street prices – rare inversion |
| Drivers | Industrial demand from EVs, PVs, 5G, semiconductors; limited mine output until 2026 |
Investor takeaways:
- Short-term price dislocations may detach from fundamentals.
- Avoid paying steep premiums in constrained vehicles.
- For long-term exposure, prefer custody-secure and liquid instruments.
Earnings Watch: IT Bifurcation, Broad Resilience
- HCL Tech: Beat estimates, raised guidance, highlighted AI contributing $100mn (3% of revenues).
- TCS: Maintained strong margins and returns but increased capital-intensive investments.
- Industry takeaway: Firms leveraging AI platforms and partnerships within asset-light models are better placed. Watch margin control and booking-to-delivery conversion.
Primary Markets & Corporate Actions
- LG Electronics India listed at a 50% premium — best debut since Zomato (2021).
- PSU Bank consolidation plans resurfaced, with an aim to create scaled credit champions.
- Global Bank Deal: Emirates NBD to acquire 51% in RBL Bank for ₹18,000 crore.
Commodities & Reserves
- RBI added $19.14B in gold reserves, raising holdings to nearly 880 tonnes.
- Steel demand remained stable despite tariff fears, with demand seen rebounding in 2026.
Policy & Regulatory Developments
- EPF framework simplified from 13 provisions to 3 unified categories for clarity and faster processing.
- Trade diplomacy: Progress with the US, EU, and Mercosur; Canada deal on hold.
- National Household Income Survey announced for better income and welfare data accuracy.
Politics, Tech & Industry Trends
- Renewed push for “Atmanirbhar Tech” and IP localisation — with infrastructure support like dedicated data-centre power grids.
- AI remains the strategic priority across boardrooms, spanning applications, platforms, and workforce transitions.
- Travel & Services: Festive airfares spiked, but outbound travel hit new highs — led by experience-driven luxury trips.
Market Psychology: From Fear to Fine Print
- Early-week panic over tariffs faded as data showed India’s exporters diverting shipments and domestic demand staying strong.
- Global risks persist — high US valuations, lender stress, and narrow leadership — but India’s domestic anchors remain intact.
- Falling inflation, stable policy, and corporate earnings visibility continue to support sentiment.
Finacrest View: Positioning & Playbook
| Asset Class | Finacrest View |
|---|---|
| Equities | Stay constructive but selective. • Favor AI-driven IT leaders and asset-light platforms. • Lean into domestic demand plays — staples, durables. • Be tactical in Real Estate & Capital Markets after sharp rallies. |
| Commodities | • Silver: Avoid chasing premiums; stagger allocations. • Gold: Maintain strategic exposure as hedge. |
| Financials | Watch PSU bank consolidation and insurer tailwinds from GST rationalisation. |
| Risk Controls | Expect higher volatility and narrower leadership. Keep liquidity to deploy on dips. |
What We’re Watching Next
- Corporate earnings: Margin discipline and AI monetization in IT.
- Flows: Will FII buying sustain as global volatility cools?
- Consumption: Post-festive demand normalization.
- Policy: Timing of next rate cut and RBI commentary.
- Commodities: Silver delivery dynamics into December expiries.
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