Daily Market News Update — 05th-06th May 2026

Midnight News Update: 05-06 May 2026

India’s direct tax collections for FY26 fell ₹80,594 crore short of the revised estimates, one of the biggest shortfalls in recent memory. The original BE of direct taxes for FY26 at ₹25.20 trillion had already been revised to ₹24.21 trillion, with actual collections at ₹23.40 trillion. Effectively, actual direct tax collections for FY26 were -3.34% lower than the revised estimates and -7.14% lower than the original budgeted estimates. Incomes up to ₹12.75 lakhs were made tax-free for filers; even as the market volatility also slowed collections. Refund payouts have been delayed for FY25.

For Q4FY26, Mahindra & Mahindra (M&M) reported 42% higher net profits at ₹4,668 crore. Sales were up 59% yoy at ₹54,982 crore. The auto segment remains the driving force for M&M, with revenues jumping 32% and PAT up 48% for the quarter. Tractor volumes also surged by 36% for the quarter. During the quarter, M&M emerged as the second largest auto player in India, outside of Maruti. By FY27, M&M also plans to expand production of EVs. However, the SUV vertical is what is driving up the sector as a whole. M&M could be a gainer from the post-Iran EV shift.

Artificial intelligence (AI) is not just simplifying life, but also refining it and making it more sophisticated. Open AI is looking at bringing out its first smart phone by early September 2026 and the mass production may may take another year to fructify. The AI smart phone by Open Ai is likely to challenge Apple on its own smartphone turf. The AI compatible smart phone will host MediaTek Dimensity chip, built on the TSMC Advanced AZM process. The AI-based phone could see combined shipments cross 30 million by 2028, and could disrupt the industry in a big way.

With the TVK party of Superstar Vijay getting very close to the half-way mark in Tamil Nadu, the next question is; how the government would be formed. Since the shortfall is only marginal, it can be made up with small parties and independents, though that would mean giving up leverage. The other option is to ally with AIADMK, but TVK would be wary considering the infighting. It could also get outside support from the DMK, but Vijay won on the back of charges against the ruling DMK. Either way, the real strategy would be out soon, and small parties may have a field day.

After the sharp slump in the rupee, the RBI is considering foreign bond issuances by state-owned banks. To sweeten the deal, the RBI may allow 5-year bonds along with offering foreign exchange swaps to participating lenders to hedge currency risk. This swap will allow the banks to buy forex from the RBI at a pre-determined price, which will limit their forex risk. The rupee is trading at a record low of around ₹95.36/$ and the RBI has been trying to defend the rupee at key milestones. The challenge for the RBI is that dollar intervention has reserve and liquidity implications.

In a significant move, Donald Trump has decided to pause “Project Freedom”, which entailed the blockade of Iranian ports. This could be indicative of an imminent deal between the US and Iran, although it remains to be seen what is the outcome of the deal. Immediately, the ships blocked in the Hormuz Transit will be allowed to go through as a humanitarian gesture. As part of the peace proposal, Iran is willing to open up the Straits of Hormuz subject to the US opening its blockade, withdrawing all sorts of sanctions and keeping the nuclear program out of the debate.

For Q4FY26, L&T reported 3% lower net profits at ₹5,326 crore. However, revenues in the quarter were up by 11.3% yoy at ₹82,762 crore. EBITDA was up 5% to ₹8,611 crore in the fourth quarter, even as the EBIT margins tapered by 60 bps to 10.4%. The consolidated order inflows in the quarter stood at ₹89,772 crore, while the overall order book position stood at ₹7.41 trillion as of March 2026. For FY25, L&T paid a dividend of ₹34 per share. L&T has been trying to pivot its overall business in favour of the high margin businesses like IT, financial services, and defence.

Krishna Srinivasan, Asia Pacific Director of the IMF, has underlined that while India has handled the energy crisis quite well, the secondary impact on food inflation could be more serious. In fact, Srinivasan underlined that the Indo-US trade deal had helped India manage the crisis better as the tariffs had been reduced from 50% to 18%, and now stand at 10% after the court order. That is the reason, IMF had only mildly lowered the growth forecast for India. However, the sooner the crisis gets over, the better it would be for India’s macros. El Nino could just exacerbate food inflation.