Weekly Market Impact — for the week ending on 21st August 2026

Weekly Capsule (Aug 17 – Aug 21) and Impact Analysis

RBI governor affirms that decision on FCNR(B) was well-thought through

• Sanjay Malhotra defended the decision to close the FCNR(B) window one month early on grounds of fiscal prudence
• Since the flows had turned into a deluge, the RBI had to be cautious about hedging costs, despite the pressure on NRIs

SEBI data indicates that small investors continue to lose money heavily in F&O

• The higher STT on futures and options may have boosted revenues, but has done little to curb retail F&O losses
• SEBI data points that such losses were more prominent among young traders, with income under Rs5 lakhs per annum

RBI MPC minutes show a hawkish tone, despite holding status quo on rates

• At least 3 out of the 6 members of the Monetary Policy Committee (MPC) have cautioned about rising inflation
• The RBI is in a monetary dilemma as it needs to contain inflation, without negatively impacting the GDP growth engine

Federal Reserve also published the minutes of its July 28-29 Fed meeting

• FOMC vote of 9:3 is known, but the minutes show a clear demand for 25 bps hike, with more hawks on the fence
• While the CME Fedwatch hints at a rate hike only in Dec-26, the vote is likely to turn 7:5 in September, forcing early hike

FPI ownership in Indian companies falls to a 17-year low level of 15.1%

• MF ownership is now at 11.6%, with DII ownership at 19.5%, the seventh quarter when DIIs holdings have been above FPIs
• This is less about an opportunistic sale of Indian stocks and more about a planned reduction in the India weight of FPIs

Situation in the Middle East stays tense with the US and Iran not keen to relent

• Trump threatened Iran with crushing economic sanctions, but that is unlikely to be successful unless China and Russia join
• On Iran’s part, it has refused to budge and has threatened to target some of the strategic American installations in Europe

Shipping traffic via Straits of Hormuz down to a fraction of pre-war levels

• From around 130 ships passing every day, the Straits of Hormuz has seen just about 10 ships pass daily in August 2026
• Majority of these ships are going dark (switching off AIS); while others are either choosing Iran lane or the Oman lane

US debt crosses $40 trillion, but the real worry may be the bond yields

• With a debt of $40 trillion, the US is not only in an economic crisis, but it also threatens stability of the global order
• The added risk is the US 10-year yields shooting up to 4.703% and the 30-year yields well above the 5.247% mark

Tata Sons AGM gets postponed on lack of quorum due to legal bottlenecks

• The two Tata Trusts (SRTT and SDTT) with 51% holding did not nominate a delegate due to the ban by Charity Commissioner
• Since the majority representative was necessary for the quorum, AGM had to be put off for the first time in its history

RBI expects to incur hedging cost of $12 billion on FCNR(B), OFCBs, and ECBs

• This is assuming total inflows of $80 billion under the window; with cost calculated at 3% per annum for a period of 5 years
• That is one of the reasons the RBI decided to stop the FCNR(B) deposit window early to curb the hedging cost it has to incur

NBFCs want RBI to review its ban on NBFCs offering revolving credit

• Major NBFCs have represented that this ban impacts nearly ₹2 trillion of transactions, mainly given to individuals and MSMEs
• This ban on revolving credit is limited to NBFCs, and the financial service majors believe it could give arbitrage to banks

FPIs buy BFSI, auto, consumer services, pharma, IT; sell telecom in H1-Aug-26

• The net inflows of $1.74 billion in the first fortnight of August was dominated by rate sensitive and consumer facing sectors
• While FPIs have turned net buyers in IT, they continue to sell into telecom, power and capital goods on valuation concerns

FPIs infuse $725 million into equities in the third week of August 2026

• This has taken the total FPI flows into equities in Aug-26 to $2.47 billion, while FPIs were marginal sellers in debt markets
• For calendar 2026 till date, FPIs sold equities worth $(24.69) billion, partly offset by $8.29 billion of debt market inflows

Brent crude scaled to $93.80/bbl amid rising tensions between Iran and the US

• During the week, Brent Crude touched a high of $94.71/bbl and a low of $88.01/bbl; with the bias clearly on the upside
• With oil movement restricted through Hormuz and Bab-al-Mandeb, supply equations are likely to be badly affected

The USDINR weakens to ₹95.70/$ as Brent and geopolitical risk add up

• For the week, the USDINR remained in the range between ₹95 and ₹96, with strong RBI defence at the ₹96/$ levels
• The heavy inflows of FCNR(B) deposits has had little impact, although one can argue that it prevented a free fall in rupee

Gold closed higher at $4,582/oz, while silver rallied to $69.65/oz this week

• Both gold and silver saw a sharp rally after the Fed minutes hinted at hawkishness, but only 1 rate hike till end of 2027
• With prices sharply below January highs, and global risks rising; safe-haven buying is coming back in precious metals

Big business groups mark foray into gold loans through their NBFC arms

• Tata Capital and Godrej Capital take the inorganic route, while Aditya Birla Finance takes organic route to gold loan thrust
• The big opportunity NBFCs see is the low risk involved in gold financing and just fraction of household gold assets monetized

Core sector growth slows to 5.4% in July 2026 from 6.0% growth in June

• Once again growth came from electricity, cement and steel, even as most of the hydrocarbon sectors were under stress
• The key sectors triggering a slowdown in core sector growth in July were the power sector and iron ore production

Indigo domestic market share grows to 67.4% in July; Air India stays at 24%

• While overall passenger traffic fell by 4.8% to 12 million in July, troubles at Spice Jet gave a larger market share to Indigo
• The number of airline passengers transported is now down from 13.46 million in June 2026 and 12.6 million in July 2025

Russian crude supply squeeze, cuts Indian import of Russian crude by 32%

• A series of Ukrainian drone attacks on oil facilities in Russia has resulted in substantial curbs on oil output across Russia
• In the first 15 days of August, oil imports from Russia averaged 1.9 million bpd as compared to 2.8 million bpd in July 2026

Sugar monthly price increase of 16% triggers stock controls and free imports

• The reasons for the price spike include bad monsoons, higher festive demand, tight global supply, and speculative hoarding
• Government dismissed ethanol as a reason stating that use of sugar for ethanol had fallen from 12% to 9% on a yoy basis