Equity Monthly for March 2026

Markets were range bound with a marginal decline in Sensex. BSE mid and small cap indices advanced by 1.1% and 0.5% respectively. On the global front, the US (S&P 500 Index) marginally declined during the month. Emerging Market Index continued to do well with MSCI Emerging Market rising by 4.7%¹.

Key Developments for the month were:

• U.S. Supreme Court ruled that the president lacks the authority to impose broad tariffs. President Trump has invoked Section 122 of the Trade Act of 1974 to impose a temporary 15% global tariff for up to 150 days. While the final verdict on tariff is awaited, lower than prior expectation of 18% can improve competitiveness of Indian exports.

• Geopolitical tensions especially in the Middle East have escalated, which may impact crude price. Benign crude has helped India; any risk to that may impact overall growth. From equity perspective, despite the temporary rate cuts that few countries have witnessed (including India), our view is interest rates will broadly remain higher over the long term; and that will have a bearing on cost of capital for companies globally.

• Anthropic launched specialized open-source plugins for Claude Cowork, catering to various applications. These "agentic" AI tools could automate complex tasks across multiple functions, traditionally core to IT services and BPO. The belief that AI agents & platforms can be plugged into large corporations is a fallacy. Enterprise technology landscapes are built on multiple technologies and databases that often take longer to adapt to new waves.

• New AI platforms will not become part of enterprise architectures without System Integrators (SIs). Indian IT service players are essential partners for scaling models like Claude and OpenAI. Though IT service companies would pass on productivity benefits gained by embedding AI into existing projects, the incremental volume of work triggered by AI adoption would ensure that overall deal sizes aren’t impacted.

• In India, broader economic indicators have shown a broad based improvement. Indicators such as Bank credit growth, Auto sales, Power consumption, e-way bills and cement production have shown improvement. Despite weak project launches, housing demand in top 7 cities saw a healthy recovery in January after a blip in the prior month². The recently concluded quarter saw a sequential improvement in demand trends. Net Sales growth for Nifty 500 for Dec-2025 quarter stood at 9.5% Vs 8.2% in the prior quarter.³

• Coming to sector performance, Capital goods, Energy, Metals and Consumer Durables were leaders w.r.t NSE 500, during the month. IT was the key laggard during the month.

• February witnessed FII & DII inflows to the tune of $ 4.3 bn & $ 2.9 respectively.4 Conducive valuation, improving earning trends, reasonable performance of EM indices and lower than anticipated tariffs could have helped in positive foreign flows.

Table 1: Performance of Major Indices during the Month

Source: Bloomberg, Data as of 28^th February 2026.
Past performance may or may not be sustained in the future.

Table 2: Current Vs Historic Valuations of major indices

Source: Price to Earnings; P/B: Price to Book; Data as of 28^th February 2026¹.
Past performance may or may not be sustained in the future.

• While the near-term economic trend is recovering; valuations appear reasonable in pockets within the large cap space (Refer Table 2). Given the correction in broader markets such as small caps, valuations here have become conducive and there are good opportunities for bottom-up stock picking.
• The 125bps interest rate cuts, benign inflation, good monsoon and consumption boost from tax cuts and GST rationalization augurs well for the economy over the medium term. The risk reward appears reasonable for a long-term investor.

Source: 1: Bloomberg, 2: Prop Equity, 3: Ace Equity, 4: Bloomberg, NSDL.

Above article is authored by Quantum.

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