Indian equity markets displayed sharp sectoral divergence in Samvat 2081, as information technology stocks emerged as the year’s biggest underperformers, while auto and banking shares led the gains.
The BSE IT index fell 16 percent, weighed down by weak global demand, rising H1B visa costs, and cautious discretionary spending from US and European clients. Persistent macroeconomic uncertainty overseas has prompted companies to scale back technology budgets, while higher US visa fees have raised concerns over operational costs and potential protectionist measures, clouding the outlook for domestic IT firms.
Analysts noted that while valuations are approaching long-term averages, earnings growth remains elusive, suggesting that patient investors may find opportunities as the sector cycles through a trough.
In contrast, the BSE Auto index rose 13 percent, rebounding sharply from an earlier slump of over 8 percent between October and July 2025. The rally was fueled by a government-announced GST cut, which has boosted festive demand ahead of Ganesh Chaturthi, Navratri, and Diwali.
HSBC highlighted that price reductions could lift automakers’ compound annual growth rate by 200–300 basis points over the next four to five years. Since the GST revision in August, auto stocks have rallied 6–17 percent, prompting HSBC to raise FY27–28 earnings estimates by 4–14 percent and issue fresh buy calls on Maruti Suzuki (Target: Rs 17,000), Hyundai Motor India (Rs 2,800), TVS Motor (Rs 4,000), M&M (Rs 4,000), and Ather Energy (Rs 600).
Nomura also flagged early recovery signs, noting stronger enquiries, higher bookings, and a positive festive outlook for automakers.
The banking sector was another standout, with the BSE Bankex climbing 11 percent over the year. Momentum accelerated from September 2025 after the Reserve Bank of India allowed domestic banks to finance mergers and acquisitions of non-financial corporations, including share purchases. Analysts described the move as a “game changer,” enabling banks to regain ground lost to private credit providers.
In its latest note, SBI Research estimates that if banks finance around 30 percent of projected M&A debt in FY24, credit growth could reach Rs 1.2 trillion, bolstering corporate lending amid subdued demand elsewhere.
Apart from this, gains in banking stocks surged further following the landmark RBL Bank deal, which has reignited investor enthusiasm for India’s smaller lenders. Emirates NBD Bank PJSC’s $3.05 billion investment in the mid-sized RBL Bank is being viewed as a strong signal of global confidence in India’s financial sector. The move underscores the growing appetite among foreign institutions to expand their onshore presence in one of the world’s fastest-growing major economies.
Recent transactions involving Sammaan Capital, Yes Bank, and now RBL Bank point to a clear trend — overseas investors are keen to capitalise on India’s robust economic momentum and well-regulated banking ecosystem. Market watchers believe this renewed interest could soon turn the spotlight on other mid-tier lenders such as Federal Bank, IndusInd Bank, and Bandhan Bank, which may emerge as attractive prospects for similar strategic investments.
Outside these outperformers, sectoral performance was mixed. The BSE FMCG index fell 4 percent, Oil & Gas eased 0.5 percent, and Capital Goods declined 0.1 percent, while Realty and Power slid 7 percent and 12 percent, respectively. Conversely, Healthcare gained 2 percent, with Telecom and Consumer Discretionary rising 3 percent each, underscoring the selective nature of market performance through Samvat 2081.
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