Dear Investors,
Market crashed when trading opened on Monday (2nd March 2026) after Israel / US launched airstrikes on Iran in a joint operation codenamed Operation Epic Fury by US Department of Defence on 28th February 2026. Amid Iran retaliation with missile and drone attacks on Israel and US military facilities, Sensex was down nearly 2,700 points on Monday but recovered during the day to close the session above the psychological level of 80,000. However, Nifty closed below the key support level of 25,000 by close of trading that day.
Technology was the worst performer in February 2026 with Nifty IT TRI down 20% due to concerns about potential disruption caused by Artificial Intelligence on the technology industry in India. Most of the tech heavyweights in Nifty dragged the market down. While large corporations are making significant investments in AI related tech infrastructure, we are seeing reduction in traditional tech spending, which may have an impact on profitability of tech companies in India. On the other hand, Power, Metals, Oil and Gas, Healthcare, Capital Goods, Consumer Durables, Automobiles, Infrastructure and Banking outperformed the broad market.
Major international indices like Nikkei, FTSE and DAX were down 1 - 2%, while the US market was also down at the start of trading session. Among other developments in February 2026, the equity market recovered after India and United States agreed on a Trade Deal. However, trade talks between the two countries have been deferred after the United States Supreme Court deemed tariffs imposed the Trump Administration illegal. Among international markets, US market ended February on a weak note with the tech heavy NASDAQ falling by 2.3%. Chinese market, on the other hand, continued to show resilience with the Shanghai Composite Index gaining 1%.
Precious metals recovered after crashing in late January / early February. On a month-on-month basis, gold was down about 4%, while silver was down 20%. However, precious metals jumped after war broke out in the middle east. Growing geo-political uncertainty may trigger rise in precious metals prices but a strengthening US dollar may temper the rally. Brent crude jumped to nearly $80 per barrel, as escalating conflict in the Middle East is likely to disrupt global crude oil and gas supplies. Oil tanker traffic through Strait of Hormuz, a key shipping lane for Middle Eastern / Persian Gulf crude oil supply, has dwindled down to trickle (source: Bloomberg). Iranian missile and drone attacks on key oil and gas facilities in the region has prompted production halt in Qatar's largest liquefied natural gas plant and Saudi Arabia's largest oil refinery. Commodity market experts are predicting crude oil prices to surge further if the conflict escalates further.
SEBI changes mutual fund categorization and Overlap norms
On 26th February 2026, SEBI has revamped mutual fund categorization vide a circular (Mutual Fund Categorization and Rationalization of Mutual Fund Schemes) There will be 5 broad categories viz. Equity, Debt, Hybrid, Life Cycle and Other schemes (ETFs, Index Funds, Fund of Funds etc). Key points are:
- The broad category Solutions Oriented Funds e.g. retirement funds, children's funds etc has been discontinued and AMCs have been instructed to merge them with other schemes that have similar asset allocation after taking prior approval from SEBI.
- A new category of mutual funds is being introduced - Life Cycle Funds. Similar to target maturity funds, Life Cycle Funds will be open ended mutual funds with predetermined maturity. (Minimum 5 years to maximum 30 years).
- AMCs can offer both Value and Contra funds provided the portfolio overlap between the two schemes is less than 50%.
- Portfolio overlap of any sectoral or thematic funds with other thematic funds or schemes from any other equity category (except large cap) will not exceed 50%. Sectoral or thematic funds will be given 3 years to remove the excess overlap.
- SEBI has standardized the framework for FOFs. SEBI has defined 6 broad categories and 15 sub-categories for FOFs.
Rapidly shifting geo-political dynamics is likely to keep market volatile in coming days and weeks. Investors should remain disciplined and continue to invest through SIP. Market volatility will give you an opportunity to average the rupee cost of your investment.
Assuring you of our best services.
Best Wishes,
Ajoy Agarwal,
(Managing Director)
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