Economy and regulatory updates
- The Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) voted unanimously to hold the repo rate at 5.50%.
- The RBI projected India’s real gross domestic product (GDP) growth for fiscal 2026 at 6.8%, with the second, third and fourth quarters at 7.0%, 6.4% and 6.2%, respectively, and 6.4% for the first quarter of fiscal 2027.
- The central bank projected the Consumer Price Index (CPI)-based inflation at 2.6% for this fiscal, with the second and third quarters at 1.8% each and the fourth quarter at 4.0%, and 4.5% for the first quarter of fiscal 2027.
- The RBI has proposed implementing the expected credit loss framework for provisioning to improve resilience of banks, credit risk management and comparability of financial statements, implemented gradually to avoid disruption.
- The central bank also extended the period for repatriation to three months from one for Indian exporters with foreign currency accounts in IFSC banking units in India.
- The RBI has decided to increase the period for the forex outlay to six months from four in case of merchanting trade transactions.
- According to government data, goods and services tax (GST) revenue rose 9.1% on-year to Rs 1.89 lakh crore in September.
- The government left interest rates unchanged for various small savings schemes, including Public Provident Fund and National Savings Certificate, for the seventh straight quarter, beginning October 1, 2025.
- The government announced the extension of fiscal benefits under the Remission of Duties and Taxes on Exported Products scheme for exports for six more months until March 31, 2026, amid 50% tariff imposed by the United States (US) on Indian imports.
- The RBI issued new directions on authenticating digital transactions, seeking to balance consumer safety and ease of use.
- The
RBI announced a series of regulatory amendments aimed at faster
transmission of policy rates, easing gold loan norms and relaxing norms of
large credit exposures.
Domestic macroeconomic indicators
Source: MOSPI, RBI
Indian debt market update
- The interbank call money rate ended lower at 5.45% in the week ended October 3, 2025, as against 5.57% in the week ended September 26.
- Government bond prices ended flat in the week. The yield on the 10-year benchmark 6.33% 2035 paper closed at 6.52% on October 3, unchanged from September 26.
- Bond prices began the week on a weaker note after the government reduced the amount of ultra-long bonds in its borrowing plan for the second half of this fiscal and increased the share of five-year and 10-year bonds.
- However, later in the week, losses were trimmed after MPC held the policy rates steady but signaled policy space for growth.
- Bond prices ended the week on a flat note as investors sold the note after the issue of the new 10-year bond.
- In the weekly debt sale held on October 3, the RBI auctioned New Government Security 2035 for a total notified amount of Rs 32,000 crore.
Indian debt market indicators
Source: CRISIL Fixed Income Database, RBI *Weighted Average Yield ^Data as of 26th September 2025 vs 19th September 2025 vs 22nd August 2025 respectively
India yield curve shift (%) (W-o-W)*
Source: CRISIL Fixed Income Database; *Weighted Average Yield
Indian equity market updates
- Indian equities ended higher this week on account of supportive measures by the RBI and hopes that the US Federal Reserve will cut interest rate. However, there were some losses due to global uncertainties, persistent foreign portfolio investment outflows and tariff concerns. The BSE Sensex and Nifty 50 rose 0.97% each.
- All sectors ended higher with Metal, Oil & Gas and Bankex gaining the most. BSE Metal, BSE Oil & Gas and BSE Bankex rose 3.93%, 2.50%, and 2.19%, respectively.
- The domestic market bought Rs 12,323 crores worth of equities in the week ended October 3, 2025, compared with Rs 17,323 crores worth of equities in the week ended September 26, 2025.
- Foreign institutional investors sold equities worth Rs 7,915 cr in the week ended October 1, 2025, compared with selling of Rs 19,343 crores week ended September 25, 2025.
Indian equity Indices
Source: BSE, NSE
Source: SEBI, NSE
Global Equity market summary
- US stocks rose during the week as investors overpassed concerns over the government shut down and picked up technology stocks on AI growth optimism and Fed rate cut hopes.
- The UK’s FTSE Index rose during the week buoyed by gains in exporters’ shares following weakness in the pound.
- Japan's Nikkei Index rose on buying in technology stocks. However, the index fell earlier in the week due to loss of major companies’ dividend entitlements, a stronger yen and as weak industrial and retail sales data for August triggered concerns over economic growth.
- Hong Kong's Hang Seng Index ended higher during the week on upbeat Chinese industrial profit data. It rose further as weak Chinese factory output data raised hopes of stimulus in China’s 15th five-year plan.
- China's Shanghai Composite Index closed higher during this week driven by growing optimism over the upcoming policy support and significant gains in key sectors such as automobiles, solar energy and metal production.
Global equity benchmark indices’ returns
Source: Websites of respective stock exchanges; *Data as on 2nd October ^Data as 30th September
Global Yield
- US Treasury prices rose during the week on haven demand amid worries that the government shut down may hurt economic growth.
- Bond prices rose after Democrats and Republicans failed to reach an agreement on the temporary federal funding bill by the deadline. Democrats were firm on their demand to include extensions of healthcare tax credits in the bill, while Republicans had argued that there was still time to hammer out a deal on the subsidies.
- Meanwhile, the shutdown has continued an economic data blackout, with the Labor Department pausing all activity including stopping the release of the September nonfarm payrolls report. This would mean the Fed will have less data to consider, while taking rate decision in its October meeting.
- The yield on the 10-year benchmark Treasury bond ended at 4.10% on October 3 compared with 4.20% on September 26.
Major global bond yields
Source: Financial Websites *As of 2nd October
Commodities and Currency
- Crude oil prices fell during the week amid oversupply woes following expectations of higher output by the Organization of the Petroleum Exporting Countries and allies, and the resumption of Iraqi exports.
- Gold prices ended higher this week on haven demand due to the US government shutdown after Congress failed to approve fresh federal funding.
- The rupee closed lower against the US dollar this week, weighed down by persistent foreign fund outflows, corporate dollar demand, and US-India trade uncertainties. However, some gains were seen after RBI in its October policy meet decided to keep rate unchanged.
Commodity prices
Source: Respective commodity exchanges, ibjarates.com *Data as on 2nd October, 2025
Other currencies vs the rupee
Source: Financial websites
Global Economic
- US ADP Employment Change rose to 32000 jobs in September 2025, compared to a revised loss of 3000 in August 2025.
- US ISM Manufacturing PMI rose to 49.1 in September 2025, compared to 48.7 in August 2025.
- Eurozone annual inflation rose to 2.2% in September 2025, compared to 2.0% in August 2025 while the annual core inflation rate 2.3%, unchanged from the previous month.
- Eurozone consumer inflation expectations eased to 24 in September 2025 compared to a revised 25.8 in August 2025.
- The British economy grew 1.4% year-on-year in Q2 2025 compared to an upwardly revised 1.7% rise in Q1.
- UK S&P Global Manufacturing PMI dropped to 46.2 in September 2025 compared to 47.0 in August 2025.
- China Industrial Profits grew 0.9% to CNY 4.69 trillion in August 2025 compared to 1.7% in July 2025.
Macro indicators
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