Asset X | September 2026: Key Signals Across Asset Classes

Domestic equities continued to find support from resilient earnings and attractive valuations, while global markets remained volatile amid rate uncertainty and concerns around the sustainability of AI-led capex. Fixed income stayed supported by RBI and Government measures that encouraged FPI flows, while investors became more selective across alternatives as valuations remained a key consideration. The rupee remained range-bound, with strong foreign currency inflows providing support despite pressure from elevated oil prices and trade-related concerns.

In this edition, AssetX looks across equities, fixed income, commodities, alternatives, and currency to unpack these developments and what they could mean for portfolio positioning in the months ahead.

Equities

Domestic Equities: Corporate earnings and growth continue to surprise on the upside, while RBI measures have helped stabilise the rupee. Valuations also remain attractive relative to 10-year median. We remain constructive on domestic equities and continue to favour one-shot deployment. The Large Cap-to-SMID allocation remains at 60:40, with a modest preference for SMIDs. Within sectors, we remain bullish on Nifty Metals and Financial Services. However, the ongoing geopolitical risks, elevated crude oil prices and the potential for a related global bond sell-off pose as key downside risks for domestic equities . Global Equities have been volatile in the recent period as uncertainty around the interest-rate trajectory and questions over ROI of the AI-driven capex cycle have weighed on investor sentiment. US markets witnessed increased allocation to defensives as well as large caps, despite extremely strong Q2 earnings results. Given increased exposure to AI and related themes we had recommend adding portfolio stabilizers to manage any future volatility, and we continue to favour that. New allocations can be considered through a well-diversified mix of developed markets, including the US, and select emerging markets outside India.

Fixed Income & Commodities

Domestic debt markets: Bond yields have found support from measures announced by the RBI and the Government to attract higher FPI inflows into domestic debt in June 2026. Additionally, the RBI's neutral policy stance and the absence of any immediate need for rate hikes should help keep yields supported. That said, persistently elevated US Treasury yields & potential rate hikes in the US could exert some upward pressure on domestic bond yields.

In Commodities, we remain constructive on gold, supported by strong structural fundamentals. One-shot allocation into gold ETFs can be considered.

Alternates

Rapid advances in AI, space and defence technologies continue to drive investor interest acrossUnlisted Equities, including deep-tech PE and VC. However, recent IPOs listing below pre-IPO valuations have tempered appetite for latestage private deals. The preference is shifting towards companies still two to three years from listing, where entry valuations and risk-return trade-off may be more reasonable.

Commercial Real Estate see a steady growth path with Bangalore, Delhi NCR & Mumbai markets leading the charge.

Currency

INR looks incrementally positive, supported by strong FCNR, OFCB and ECB deposits of ~USD 137 Bn. However, elevated oil prices continue to pose risk to the trade deficit and could limit INR gains. We expect the INR to remain range-bound within 90–96/USD.

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This communication is for informational purposes only and does not constitute investment advice. Please refer to the full disclaimer in the Asset X report dated September 7th, 2026.