Mumbai markets bled red for the better part of 2026, leaving most domestic asset classes in the negative. The Sensex is down 16% year-to-date, with the Nifty 50 lagging just behind at a 15% loss. Bond investors fared no better, watching yields climb and portfolio values shrink.
The only bright spot? Crude oil. The US-Iran war in the Persian Gulf sent Brent crude up 67%, making energy traders the sole winners in a sea of losses. Copper also held firm, jumping from $5.6 to $6.5 per ounce, a 15% gain. Meanwhile, the rupee weakened 7%, dragging down domestic returns for gold and silver.
SBI Mutual Fund’s latest report flags inflation as the year’s defining macro theme. A delayed monsoon has depressed sowing activity, lifting food price risks. Input costs for cement, electrodes, and FMCG are broadening, not easing. “The world is in an inflationary boom, not yet an inflationary bust,” the report stated. “A further rise in oil, or high bond yields starting to hurt growth, could tip it into a bust.”
Vinod Nair, head of research at Geojit Investments, sees the RBI’s next policy decision as the critical trigger. Pressure to support the rupee and contain imported inflation is strengthening expectations of a rate hike. With Q2 corporate earnings expected to be softer than Q1, sentiment remains fragile. “A meaningful de-escalation in West Asia could trigger a sharp relief rally,” Nair said. “Until then, investors should stay selective, favouring earnings visibility.”