February 2026 Monthly Market Summary

February 2026 saw Indian equities decouple from global headwinds, with the Nifty 50 rising 1.3% following a fiscally disciplined Union Budget. Global liquidity remained restricted as hawkish Fed rhetoric pushed US 10-year yields to 3.88% and lifted the DXY to 104.4. Despite overseas equity turbulence, Indian institutional sentiment solidified around government infrastructure commitments. Domestic consumer confidence was reinforced by tax stability, while RBI liquidity interventions kept Indian 10-year yields stable at 6.74%.

February 2026 Monthly Journal

February presented a marked divergence between global macro distress and Indian policy execution. Across developed markets, financial conditions tightened considerably as sticky services inflation forced central banks to adopt hawkish forward guidance. The US 10-year Treasury yield rose toward 3.88%, and the Dollar Index firmed to 104.4, exerting renewed pressure on emerging market currencies and funding channels.

Global market behavior was characterized by choppiness and directionless rotation. Investors oscillated between fears of prolonged restrictive policy and concerns over decelerating corporate margins, resulting in defensive positioning and muted risk appetite across Western bourses.

Conversely, the Indian market found an anchor in the Union Budget. Heading into the announcement, market participants were divided over whether the government might adopt populist spending. Instead, the administration delivered a masterclass in fiscal prudence, reaffirming its fiscal deficit consolidation trajectory while expanding targeted capital expenditure on logistics and digital infrastructure.

This policy certainty dissipated institutional ambiguity. Domestic mutual funds deployed fresh capital into engineering, cement, and banking equities. Foreign Portfolio Investors, acknowledging India's macroeconomic stability premium, curtailed their net outflows despite elevated US yields. Indian consumer sentiment was further supported by personal tax consistency and sustained rural development outlays, maintaining healthy ground-level economic momentum.

Indian debt markets exhibited stability amid global fixed-income volatility. A smaller-than-anticipated sovereign market borrowing program, paired with the RBI’s fine-tuned repo operations, anchored the 10- year sovereign yield at 6.74%. February underscored India’s capacity to chart an independent trajectory through domestic fiscal discipline, even as tight global liquidity and a firm dollar constrained broader emerging market performance.