EF Digest - April 2026

Dear Investors,

The Iran War has thrown global financial markets into volatility and turmoil. The Nifty and Sensex crashed by nearly 12% in March 2026. The Nifty closed the month below 23,000 and Sensex below the sentimental level of 75,000. The rout extended from the frontline stocks to the broader market also with Nifty 500 index falling by 11%, pointing to weak risk sentiments. Large caps fell by 12%, midcaps by 11% and small caps by 10%. All industry sectors were in red in March. Banking, realty, auto, oil and gas, consumer durables and FMCG were among the worst performing sectors.

Emerging markets (MSCI EM Index) underperformed versus developed markets. MSCI EM Index was down 13% in March, while MSCI ACWI (which comprises both developed and emerging markets) was down 7%. India underperformed in the emerging market basket. This resulted in massive FII sell-off in March with FII net sales of Rs 1.17 trillion, which was the highest in last 24 months. Mutual funds supported the market with net purchase of around Rs 75,000 crores.

All major global stock indices were down in March. In the US market the Dow, NASDAQ and S&P 500 were down around 5% each. Among other developed markers, Nikkei (Japan), FTSE (UK), DAX (Germany), CAC (France) and Hang Seng (Hong Kong) were all down month on month. The Shanghai Composite (China) was down by 6.5%. Severe disruption to energy supplies due to the virtual closure of Strait of Hormuz and sky rocketing crude oil prices, up by 44% (Brent Crude) on a month-on-month basis in March has increased inflationary expectations and recession risks.

The war has also halted the spectacular rally of gold and silver, which had been facing some headwinds earlier also. Gold dropped by nearly 8%, while silver declined by 14%. Strong dollar and rising US Treasury bond yields created headwinds for precious metal prices. Precious metals have an inverse relationship with US dollar and US interest rates / bond yields.

Crude oil prices have shot up 44% (Brent Crude) on a month-on-month basis in March. The war has impacted fertilizer and petrochemicals productions. This war has also impacted prices of petroleum products like gasoline, diesel, Liquified Petroleum Gas (LPG), Liquified Natural Gas (LNG) and by-products e.g. petrochemicals, fertilizers etc. Fertilizer shortage may drive up global food prices. Inflationary expectations caused the 10-year US Treasury Bond yield to rise by 45 bps before receding to 4.3%. Looming spectre of global inflation due to supply chain disruption and rising crude oil prices, caused the 10-year US Treasury Bond yield to rise by 45 bps. The 10-year G-Sec yield shot up by 30 bps in March and the 1-year G-Sec yield rose by 23 bps. The US dollar has strengthened against the major currencies as global economy faces increasing recession risks. The INR depreciated further closing the month at INR 93.50 to a dollar.

On 8^th April 2026, US and Iran agreed to a 15-day ceasefire. Iran has agreed to stop attacks on ships transiting through Strait of Hormuz and help coordinate passage of ships through the narrow Strait. The markets cheered the ceasefire agreement, with the Nifty rising by 874 points, closing near the 24,000 level. Major Asian and European markets were in the green. Brent crude price plummeted by $14 per barrel to around $95 per barrel. Historical evidence shows that markets often enters a bull market phase after wars end. Investors can take advantage of the correction to add equity to their asset allocation.

Assuring you of our best services.

Best Wishes,

Ajoy Agarwal,

(Managing Director)