Newspaper Summary 210626

 

Domestic flows help cash market defy correction

By Akhil Nallamuthu, bl. research bureau

Indian equities may have fallen sharply in early 2026, but the cash market did not freeze. On the contrary, trading activity increased. The average daily turnover (ADT) in the cash market climbed from ₹1.02-lakh crore in December 2025 to ₹1.35-lakh crore in March 2026, even as benchmark indices corrected about 15 per cent. Such resilience during a sell-off was last seen during the Covid-led market crash.

The difference this time lay in who was driving the trade. Foreign portfolio investors (FPIs) pulled out nearly ₹1.3-lakh crore in the first three months of 2026, but mutual funds pumped in about ₹1.5-lakh crore, helped by steady SIP flows. The result was a market correction without the usual collapse in cash-market activity, unlike the previous three corrections.

In fact, the cash market strength continued even after broader equity sentiment recovered. Cash ADT stood above ₹1.4-lakh crore in both April and May, hitting a two-year high. This indicates that the turnaround was not confined to the correction phase alone. For the January-May period, FPI outflows and mutual fund purchases stood at ₹2.25-lakh crore and ₹2.44-lakh crore, respectively.

INSTITUTIONAL MOVES

The latest episode also highlights a structural change in market ownership. During the Covid sell-off, foreign investors remained the dominant force in the market. Over the years, however, domestic institutions have steadily increased their presence. The shift became evident by March 2025, when domestic institutional investor (DII) ownership surpassed that of FPI.

The DII share of ownership in Nifty 500 companies expanded to an all-time high of 20.9 per cent in March 2026, while the FPI share dropped to a new low of 17.1 per cent. The influence of domestic investors is also evident in their buying firepower; during the first three months of 2026, net investments by mutual funds stood at ₹1.53-lakh crore, nearly four times higher than the net ₹41,304 crore invested during the early 2020 Covid sell-off. For the January-May period, the figure rose further to ₹2.87-lakh crore.

The resilience in turnover has also been aided by a revival in participation among non-institutional investors, particularly in the small- and mid-cap segments. “Small- and mid-cap stocks are seeing greater participation from non-institutional investors. Activity in these segments had fallen earlier but has picked up in recent months. That has helped support turnover in the cash market,” said Deepak Jasani, an independent market veteran.

DERIVATIVES GAME

Interestingly, the resilience in the cash segment stands in contrast to developments in the derivatives market. While cash market ADT rose during the correction, derivatives turnover remained below the levels seen before SEBI tightened norms in the F&O segment. Average daily derivatives turnover across exchanges declined from ₹472-lakh crore in December 2025 to ₹462-lakh crore in May 2026.

The sharp decline in late 2024 followed SEBI’s measures aimed at curbing excessive speculation, including higher contract sizes for index derivatives. Since then, market participants have gradually adapted to the new environment. “Traders have tweaked their systems and processes to better suit the new conditions they are operating in,” says Jasani.

The recovery, however, has not been uniform. According to Feroze Azeez, Joint CEO of Anand Rathi Wealth, smaller traders have been affected the most. “The most impacted category has been retail or individual traders, particularly those trading small-sized contracts with limited capital. The higher minimum contract sizes have effectively raised the entry barrier,” Azeez says.

‘India’s LPG use to double to 2 mb/d in 25 years’

By Rishi Ranjan Kala, New Delhi

Liquefied petroleum gas (LPG) use in the world’s second largest consumer is projected to double in 25 years to 2 million barrels per day (mb/d). According to OPEC’s World Oil Outlook 2026, the demand growth in LPG will come from the residential sector, which accounts for almost 90 per cent of the annual requirement. Besides, an expanding petrochemicals segment is also pushing usage. The outlook period is from 2026 to 2050.

“India’s petrochemical sector also contributes to ethane/LPG demand growth. Additionally, LPG use is widespread in India’s residential sector and the country is projected to see higher demand for this product going forward. Overall, ethane/LPG demand is projected to double between 2025 and 2050 to reach nearly 2 mb/d,” OPEC said. Rising energy access in India will support LPG use in the long term, it anticipated. “In the light products sector, the largest increase is expected for ethane/ LPG, with demand increasing by 3.5 mb/d,” the report projected.

A back-of-the-envelope calculation shows that the country’s average LPG usage stood at roughly 90,991 TPD in FY26, 85,830 TPD in FY25 and 81,271 TPD in FY24. Almost 90 per cent is consumed by households for cooking with the remaining going to the industrial sector. The Petroleum Planning and Analysis Cell (PPAC) expects India to consume around 34.69 million tonnes (mt) of LPG in the current financial year, ending March 2027. This is a growth of roughly 4.5 per cent on an annual basis. India’s cumulative LPG consumption rose 6 per cent y-o-y to 33.21 mt in FY26 provisionally, which is the highest annual growth in usage since FY19.

LONG-TERM GROWTH

Overall, OPEC projects that the primary sources of long-term oil demand growth are India, Other Asia, the Middle East, Africa and Latin America. Demand in these regions is set to increase by 25.2 mb/d between 2025 and 2050, with India alone adding 8.1 mb/d. At the same time, oil demand in Other Asia, the Middle East and Africa is set to increase by 5.3 mb/d, 4.7 mb/d and 4.3 mb/d, respectively. Oil demand in Latin America is projected to increase by 2.8 mb/d and China by 1.1 mb/d over the same period, it added.

From a sectoral perspective, OPEC anticipates that oil demand growth out to 2050 is set to be driven by road transportation, aviation and petrochemicals, with increases of 5.7 mb/d, 4.2 mb/d and 4.6 mb/d, respectively.

Hormuz shut again; Iran, US teams in Swiss town for talks

Bloomberg

Iran said it has closed the Strait of Hormuz due to what it called a violation of the ceasefire by Israel attacking Lebanon. However, it sent a team to Switzerland for prospective peace talks with the US.

In Washington, Vice-President JD Vance said top US negotiators Jared Kushner and Steve Witkoff were already in Switzerland working through technical details of the negotiations on Iran's nuclear programme. Talks initially set for Friday were put off after fighting.

Pushy product sales become tougher

By Kumar Shankar Roy, bl. research bureau

A customer applies for a loan, and along the way, an insurance cover is added. A credit card is sold as free, but the fee waiver depends on minimum spending. A mobile banking app flashes a limited-period loan offer with a countdown timer. These are familiar situations for many financial consumers, representing a grey zone between selling and mis-selling.

On June 15, 2026, the Reserve Bank of India (RBI) issued final amendment directions to address these issues, covering a wide set of regulated entities including commercial banks, small finance banks, regional rural banks, and most NBFCs. These directions, which come into effect on January 1, 2027, dictate that financial products cannot be pushed through confusing consent, hidden add-ons, unsuitable recommendations, or manipulative digital design.

CLEAR CONSENT

A central pillar of the new rules is the requirement for explicit, specific, and informed consent. This must be obtained through a signed declaration, OTP approval, digitally recorded confirmation, or a clearly separated section in an agreement. Regulated entities must maintain proof of this consent for one year after the product relationship ends.

To prevent customers from inadvertently agreeing to multiple products, each service must be listed clearly, and the customer must have the option to choose only what is desired. Crucially, the default choice for consent on any interface must be “No” or “I do not agree”. Additionally, all sale documents for an entity's own products must be provided in a language understood by the customer or the local regional language.

The RBI has also widened the definition of mis-selling to include cases where a product is unsuitable for a customer's profile at the time of sale, even if explicit consent was given.

NO FORCED ADD-ONS

The new regulations strictly ban compulsory bundling, where one product is made conditional on another. For instance, a loan applicant cannot be forced to buy insurance only from the lender's preferred partner. Lenders are also prohibited from funding the purchase of any product or service out of a sanctioned loan facility without explicit consent.

The rules also target "dark patterns"—digital design tricks used to push users into choices. Prohibited tactics include:

• False urgency and nagging.
• Basket sneaking (adding extras without permission).
• Confirm shaming (making users feel guilty for saying no).
• Subscription traps and interface interference.
• Bait-and-switch and drip pricing (hiding charges until later).

Regulated entities are now held responsible for the actions of their Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs). These representatives must not mislead customers about their identity, and those operating inside branches must be visually distinguishable from regular employees with clear identification. To curb aggressive mis-selling, employees are barred from receiving sales incentives or commissions from third-party product providers.

QUESTIONS TO ASK

Customers are encouraged to ask if a product is compulsory or optional, if it's from the bank or a third party, and to check for hidden default selections. Sales calls are restricted to between 09:00 and 19:00 hours, and home visits require explicit consent.

If mis-selling is established, the entity must refund the amount paid and compensate for losses. Customers typically have a 30-day window from the receipt of a signed agreement to complain if no other timeline is specified. Furthermore, entities must establish a separate department to seek customer feedback within 30 days of a sale.

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MAJOR CHANGES

• Explicit consent required for all sales.
• Forced bundling of products is banned.
• Deceptive dark patterns are strictly prohibited.

Taking global exposure without international funds

By Dhuraivel Gunasekaran, bl. research bureau

Dedicated international funds have been among the better-performing diversification options for Indian investors, but many of them are not easy to access today. With industry-level overseas investment limits largely exhausted, several schemes have suspended or restricted fresh inflows. For investors still looking for global exposure, the workaround may lie within domestic equity-oriented schemes themselves.

SUBSCRIPTION CHALLENGES

Gaining exposure to overseas markets through dedicated international funds is not straightforward because the RBI has capped the mutual fund industry’s overseas investments at $7 billion, with an additional $1-billion limit for overseas ETFs. As these limits have largely been exhausted, many international funds have suspended or restricted fresh subscriptions. Consequently, among the 66 dedicated international funds available, only a handful remain open for investments at any given time, making it difficult for investors to access overseas opportunities.

Interestingly, several domestic equity schemes, which are required to maintain at least 65 per cent exposure to Indian equities, have quietly built meaningful allocations to overseas stocks. Currently, 40 such schemes hold overseas exposure of up to 29 per cent of their portfolios. These include flexi-cap, focused, value, and multi-asset funds, as well as sectoral and thematic strategies focused on technology, healthcare, innovation, and commodities.

FLEXI-CAP AND FOCUSED FUNDS

• Parag Parikh Flexi Cap: As of May 2026, this fund had 12 per cent of its assets (₹17,070 crore) invested in overseas equities. Its overseas portfolio is primarily concentrated in leading US technology companies such as Alphabet, Amazon, Facebook, and Microsoft. Historically, the fund has invested up to 30 per cent overseas, though this varies based on market conditions and regulatory constraints.
• SBI Focused Fund: This fund held 12 per cent of its assets (₹5,545 crore) in overseas equities, tactically maintaining international exposure to enhance its performance.

VALUE AND TECHNOLOGY FUNDS

• DSP Value Fund: Held 15 per cent (₹274 crore) of its assets in overseas equities, diversified across regions including the US, Europe, China, Taiwan, and Canada, and sectors like healthcare and energy.
• Technology Funds: Five technology funds maintain significant overseas exposure: Edelweiss Technology (29 per cent), Franklin India Technology (22 per cent), SBI Technology Opportunities (14 per cent), ABSL (6 per cent), and ICICI Prudential Technology (5 per cent). These funds predominantly invest in US technology leaders, providing access to niche sectors like artificial intelligence and semiconductors.

OTHER CATEGORIES

• Dividend Yield Funds: ICICI Prudential Dividend Yield Fund’s international allocation has ranged between 11 per cent and 19 per cent, primarily investing in emerging markets like China, South Korea, and Taiwan. Conversely, Aditya Birla Sun Life Dividend Yield Fund favors US and global companies.
• Multi-Asset Allocation (MAA) Funds: Several MAA funds provide international exposure, including Invesco India MAA (14 per cent), DSP MAA (13 per cent), Bandhan MAA (8 per cent), and Nippon India MAA (5 per cent).
• Children’s Fund: SBI Children’s Fund-Investment is the only scheme in its category with overseas exposure, allocating 15 per cent (₹974 crore) to international equities.

TAKEAWAYS

By maintaining at least 65 per cent in domestic equities, these schemes continue to enjoy equity taxation while offering a gateway to overseas markets. This exposure provides geographical diversification and access to global leaders difficult to reach through Indian equities alone.

Investors should choose funds based on their primary investment mandate rather than overseas exposure alone. Flexi-cap, focused, and value funds can form part of a core equity allocation, while sectoral funds like technology and healthcare are better used as satellite allocations due to higher volatility.

Bulls gain the edge

By Akhil Nallamuthu, bl. research bureau

Nifty 50 (24,013) and Nifty Bank (57,686) gained 1.7 per cent and 1.5 per cent respectively over the past week, extending their recovery for a second consecutive week. The derivatives data suggests that the rebound is gaining traction, although it continues to be driven largely by short covering rather than fresh long additions.

FIIs (Foreign Institutional Investors) remained net short on index futures, although the position narrowed 7 per cent over the last week to 2.3 lakh contracts. However, they increased net short positions on index call options and raised net long positions in index puts, suggesting they continue to maintain a cautious stance through the options segment.

At the broader level, the positioning appears relatively stable. Combined net short positions on index futures increased marginally, while net short positions on call options and net put shorts declined, suggesting that bearish conviction among traders has eased further.

NIFTY 50

Nifty futures (Jun) (24,057) began last week with a gap-up above the resistance at 23,800. The contract extended the gains and hit a high of 24,210 on Thursday before easing on Friday to close the week at 24,057. The rally was driven largely by short covering for the second consecutive week.

Despite Friday’s correction, the contract continues to trade above the key support levels of 23,900 and 23,800. The 21-day moving average is currently at 23,700, and as long as this level remains intact, the near-term outlook will stay positive.

Strategy:

• Go long on Nifty futures (Jun) if it declines to 23,900.
• Place stop-loss at 23,650 and book profits at 24,500.
• Alternatively, if the contract breaks above 24,210, initiate fresh longs with a stop-loss at 24,000.

NIFTY BANK

Nifty Bank futures (Jun) (57,862) also opened with a gap-up last Monday. Although the contract surrendered part of the gains during the session, it regained momentum in subsequent days and touched a high of 58,049.

The chart continues to reflect a positive bias. Although the contract could witness a corrective decline, the outlook will remain bullish as long as the support at 56,600 stays valid. A rally can lift Nifty Bank futures to 59,000, with resistance above that at 60,000.

Strategy:

• Buy Nifty Bank futures (Jun) on a dip to 57,200.
• Place an initial stop-loss at 56,400.
• Revise the stop-loss higher as the contract rises, and book profits at 59,000.
• Alternatively, if it breaks above 58,100 without a dip, initiate fresh longs with a stop-loss at 57,750.

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RELATIVELY STABLE

• Nifty futures reclaims 23,800.
• Nifty Bank futures eyes 59,000.
• Key breakouts hold firm.

Is gold still a safe haven?

By Aarati Krishnan

As investors, the main reason many of us hold gold in the portfolio is to act as a safe haven. When events such as wars, financial crises, or calamities arrive, gold acts as a shock absorber because its prices generally rise when financial assets tumble.

Lately, however, gold has been failing in this safe-haven role. Just a day before US-Iran hostilities broke out, gold (24-carat) was ruling at ₹1.6 lakh per 10 gram in India. On war news, it spiked for a single day to ₹1.73 lakh; thereafter, the journey has been steadily downhill, with prices falling to ₹1.46 lakh by June 19. This is a 16 per cent drop from the peak. Indian investors have been cushioned by rupee depreciation; global gold prices have tumbled 22 per cent during this period.

WHY GOLD FELL

Gold dons many hats as an asset—commodity, currency, safe-haven, and status symbol—resulting in many factors impacting its prices. The recent price fall seems to be due to four factors:

• Rising Treasury Yields: Gold competes directly with US Treasuries (US government bonds) as a safe-haven choice. Whenever the yield on US Treasuries soars, gold loses a bit of its lustre. After the Iran war started in February, bond markets began pricing in the possibility of Fed rate hikes instead of cuts, propelling the 10-year yield from below 4 per cent to over 4.5 per cent in May.
• Central Bank Sales: Central banks are the world’s largest hoarders of bullion. While they added significantly to holdings between 2020 and 2025, they tend to cut back at price highs. World Gold Council data show central banks cut back purchases as prices shot up toward $4,800. Additionally, in Q1 2026, Turkiye, the Russian Federation, and Bulgaria together offloaded about 103 tonnes of gold to raise emergency credit.
• Ebbing ETF Flows: ETF buyers often chase momentum, flocking to gold when returns look good and abandoning it when losses crop up. As gold prices moderated from March 2026, ETFs saw outflows, magnifying the downward price trend.
• Profit-taking: In the year from March 2025 to February 2026, gold saw a breathless 90 per cent rally. When gold showed signs of topping out in February 2026, investors sitting on super-normal gains were likely tempted to lock them in, especially as other markets tanked.

TAKEAWAYS

Gold price moves are extremely hard to predict because there are no cash flows to arrive at a "fair value".

• Long-term Returns: Analysis suggests gold manages a 12-13 per cent return if held for five years, making it a good asset class for equity-like returns.
• Crisis Protection: While gold has worked as a safe haven in the past, it doesn't work every time. Hopping onto gold after a major crisis breaks out is generally a bad idea.
• Steady Allocation: To capitalise on gold returns, you need a constant allocation (perhaps 10 or 15 per cent) in your portfolio.
• Price Direction: Monitor US Treasury yields and rate hike expectations; waning rate hike expectations are bullish for gold.

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GOLD GUIDE

• Gold can deliver equity-like returns.
• Crisis protection does not always work.
• Keep allocation steady.

Lifting hopes

INDEX OUTLOOK: The benchmark indices can rise more on a break above their immediate resistance By Gurumurthy K, bl. research bureau

Nifty 50, Sensex and Nifty Bank index opened the week with a wide gap-up last week. Thereafter they broadly stayed stable but higher all through the week. All the three indices were up over 1.5 per cent each last week. The US and Iran agreeing for a peace deal triggered this gap-up open last week.

On the charts, the picture is positive. Sensex and Nifty have resistance ahead; they are likely to breach this hurdle and move further higher. Nifty Bank index, on the other hand, can remain in range for some time, eventually making a bullish breakout of its range to go higher.

FPIS BUY

The Foreign Portfolio Investors (FPIs) snapped their eight-week selling spree, buying $251 million in the equity segment. If they start to accelerate their purchase, it can aid the Nifty and Sensex in gathering bullish momentum.

NIFTY 50 (24,013.10)

• Short-term view: The follow-through rise last week turns the picture positive. Support is in the 23,800-23,600 region, while resistance is at 24,250. Nifty can breach this hurdle and rise to 24,500 and 24,800 in the coming weeks. The picture turns negative only if it declines below 23,600, which currently looks less likely.
• Medium-term view: Nifty seems to have resumed its up-move within the broad 22,000-26,500 range. A break above 24,800 will clear the way for a rise toward 26,500. Long-term targets could reach 28,000 and 30,000. This view only fails if the Nifty declines below 22,000.

NIFTY BANK (57,685.75)

• Short-term view: The break above 57,000 and rise to 58,000 happened as expected, though last week’s candle indicates some indecisiveness. Support is at 56,500 and resistance at 58,800. The index may oscillate in this range for some time. An eventual break above 58,800 can take it to 60,500-61,000.
• Medium-term view: The outlook remains bullish. A decisive break above 61,000 could boost momentum toward 65,000, with long-term potential for 68,000-69,000.

SENSEX (76,802.90)

• Short-term view: After touching a high of 77,492, the Sensex has come off slightly. Support is now strong between 76,300 and 76,000. We expect it to sustain above 76,000 and breach the 77,800 resistance to move toward 78,500-79,000.
• Medium-term view: Sensex remains in the 71,000-86,000 range. A break above intermediate resistance at 80,000 can take it to the upper end at 86,000. Long-term targets include 90,000 and 94,000.

NIFTY MIDCAP 150 (22,972.95)

The 21,700-23,000 range remains intact. The index is nearing the upper end, with another resistance at 23,150. Breaking above 23,150 could trigger a rally to 26,000-26,500 in the medium term and 28,000-28,500 in the long term. Failure to break these levels may keep the index sideways.

NIFTY SMALLCAP 250 (17,713.80)

Last week's rise indicates gaining momentum, with crucial resistance in the 18,000-18,300 region to be tested this week. An eventual break above 18,300 could lead the index to 22,500-23,000 and 24,000 in the long term. If it fails and drops below 17,500, a further fall to 17,200 is possible.

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IMMEDIATE RESISTANCE

• Nifty 50: 24,250
• Sensex: 77,800
• Nifty Bank: 58,800

Skinny Fed approach

GLOBAL VIEW: Kevin Warsh turns consoler-in-chief for Wall Street Reuters, Washington

US Federal Reserve Chairman Kevin Warsh put his stamp on the job fast this week at a debut policy meeting that produced a return to stripped-down, 1990s-style central banking, before this century’s crises put the Fed center-stage in economic management and turned its leader into a consoler-in-chief for Wall Street and Main Street alike.

The question now is whether the reduced role he seeks for the Fed and in effect for himself is compatible with a world grown more complex, a more-intense and polarised information environment, and markets now accustomed to a steady diet of top policymaker commentary.

RATE HIKE

Whether he intended it, Warsh’s emphasis on inflation in Wednesday’s press conference, without any more-nuanced commentary about what might clear the bar for a rate hike, led investors to conclude an increase was coming soon and begin bidding up bond yields.

The market reaction “was massively amplified by Warsh’s press conference that combined a hawkish near single-mandate emphasis on the need to deliver price stability with a total absence of any modulating discussion of the Fed’s strategy or reaction function,” wrote Krishna Guha, a former top communications official at the New York Fed. “Discussion of the reaction function and strategy, supports more effective central banking,” a main tenet of current central bank practice.

The Fed at Warsh’s first meeting held rates steady in the 3.50-3.75 per cent range where they’ve been since December, announcing it in a spare policy statement reminiscent of those penned in the 1990s. Instead of the simple factual statement that “inflation is elevated” used under former Chair Jerome Powell, the first Warsh statement was conditional, saying inflation was elevated “relative to the Committee’s 2 per cent target”. The wording could mean inflation is not considered excessive in an absolute sense.

Warsh, while reaffirming the 2 per cent target, also has said the decimal point values don’t matter, hinting at some tolerance of inflation merely near the Fed’s goal. On economic growth overall, the statement highlighted aspects Warsh sees as important to the future and currently booming — productivity and capital investment — without running through the full list of components of gross domestic product.

Whether the new style is sustainable will hinge on factors including market reaction over time and how the world evolves, as Fed leaders often find that firm “first principles” wear thin in a crisis.

OLD GHOSTS

Likewise, Warsh announced five task forces geared to Fed reform, with a question mark over whether they “will be agents of regime change or just more commissions to rehash old debates,” wrote JP Morgan Chief Economist Michael Feroli. Communications reform was discussed last year but ended with a stalemate despite high-level analysis by former Chairs.

After more than a decade of sharp criticism of the Fed, Warsh likely had to follow through after promising he would be “knocking some heads”. The pandemic had expanded the Fed’s role with a multi-trillion-dollar effort to support the economy, and Powell’s role involved explaining it in prime-time media appearances designed to reassure households and markets. In suggesting all that might be dialed back, Warsh is signaling a significant shift in operational philosophy.

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JURY STILL OUT

• Whether the new style is sustainable will hinge on factors including market reaction over time.

India to host 2-day meet of top BRICS security officials

Press Trust of India, New Delhi

Chinese Foreign Minister Wang Yi, Russian NSA Sergei Shoigu, and top BRICS security officials will converge in New Delhi on Monday for a two-day conclave that will focus on pressing geopolitical and regional security challenges. The conclave of BRICS National Security Advisers will be chaired by NSA Ajit Doval.

China has already announced that Wang will attend the deliberations. The Chinese Foreign Minister is also expected to hold a bilateral meeting with Doval. It is learnt that Iranian Supreme National Security Council’s Deputy Secretary Nezamipour is also expected to join the conclave that is set to prepare the ground for the BRICS summit to be held in September in India. New Delhi is hosting the summit in its capacity as the current chair of the bloc.

Top BRICS security officials are expected to deliberate extensively on the overall regional security scenario, including the situation in West Asia as well as the Russia-Ukraine conflict.

The Indian side is likely to raise its concerns over terrorism, including cross-border terrorist activities targeting Jammu and Kashmir by terror groups based in Pakistan. The Pakistan-Afghanistan hostilities may also figure in the deliberations, according to people familiar with the matter.

“During the meeting, the National Security Advisers/Heads of Delegation of BRICS member countries will exchange views on the theme ‘Non-traditional security challenges confronting the world today’,” the Ministry of External Affairs said. It added that the officials will also discuss the rapidly evolving nature of national security challenges as well as the role of new technologies in emerging security threats.