India is considering a significant reduction in the taxes paid by foreign investors on the country's bonds as authorities seek to align policies with global norms and attract inflows, Bloomberg News reported on Thursday.

The move, recommended by the Reserve Bank of India, is being seriously considered by the Finance Ministry as authorities seek to curb the rupee's depreciation, the report said, citing sources familiar with the matter.

The global bond market limped to the end of a bruising week on Friday, as growing evidence of economic damage from the Iran war prompted investors to assume interest rates will rise faster than expected and growth will suffer.

U.S. Treasury yields hit their highest in around a year as traders anticipated the Federal Reserve may need to hike rates to rein in inflationary pressures stemming from Iran war-fuelled energy shocks.

Euro zone bonds, including German, Italian and French, came under fire, along with UK gilts, while Japanese bond yields hit record highs.

Italian 10-year bonds were among the worst performers, with yields up 7.4 basis points to around 3.86%, bringing the rise for the week to nearly 14 bps, while benchmark German Bund yields rose almost 6 bps to around 3.11%.

Inflation data this week has shown consumers and businesses are starting to see big increases in price pressures as a result of the war, which has pushed up the price of crude by more than 50%.

Securities and exchange board of India (Sebi) proposed on Wednesday to allow mutual fund houses to use intraday borrowing for purposes other than redemption or unitholder payouts like for liquidity needs for trade settlements, derivative obligations, repayment of existing borrowings etc.

In addition, the regulator has also proposed to allow the quantum of these intraday borrowings to exceed guaranteed and non-guaranteed receivables of fund houses as long as they remain within the regulatory limits of below 20% of the assets of the scheme on the previous day. The regulator specified that in the event of the intraday borrowings exceeding the receivables, the AMCs will be responsible to repay the intraday borrowings by the end of the day and ensuring that any intraday borrowing converted to overnight borrowing remains within regulatory limits and for the allowed purposes.

Foreign borrowing filings by companies and lenders halved to USD 5.43 billion in March amid financial market volatilities following the West Asia conflict, the RBI said on Thursday.

The proposals filed by Indian companies, including non-banking financial companies (NBFCs), were lower than the USD 11.04 billion they had filed in March 2025, but higher than preceding February's USD 4.59 billion, the RBI said.

Of the total, intent from general permission stood at USD 5.22 billion in March 2026, and special permission was USD 212 million, according to data.

Market regulator Sebi has proposed several changes to the municipal bond framework including easing fundraising norms and enabling pooled financing by multiple urban local bodies.

On Wednesday, the regulator has proposed allowing municipalities to explicitly raise bonds for refinancing existing debt, while mandating detailed disclosures on lenders, repayment schedules, interest costs and any past restructuring. It has also suggested capping the use of issue proceeds towards working capital requirements at 25% and said issue proceeds should not be used for general purposes.

As on March 31, 2026, 22 municipal corporations have accessed capital market and raised Rs 4,540 crore through 31 issuances of municipal debt securities, Sebi data showed.

Market regulator Securities and Exchange Board of India (Sebi) has proposed expanding the scope of intraday borrowing facilities for mutual funds, allowing fund houses to use such borrowings for a wider range of cash management needs beyond just redemption payouts.

The market watchdog released a consultation paper on Wednesday, seeking public comments on this by June 3, 2026.

The market regulator said the move follows representations from the Association of Mutual Funds in India (AMFI) and aims to address operational timing mismatches between payout obligations and receipt of funds from various sources. Sebi noted that while intraday borrowings were earlier permitted mainly to bridge gaps linked to guaranteed receivables from entities such as the Government of India, RBI and CCIL, mutual funds increasingly use such facilities for broader liquidity management purposes.

valuations sought by Indian companies alongside geopolitical turmoil have weighed on the appetite of private equity (PE) investors, who have moved away from big buyout deals, driving down the amount of capital invested in the market and average deal value in 2025, Bain & Company said in a report.

In all, PE investors deployed $19.6 billion in India last year, down by about 33% year-on-year. The expanding scope of Al and its impact on traditionally PE-backed sectors such as IT and tech services also nudged investors to go slow on capital allocation.

The recent slowdown in foreign direct investment in India is “not a major source of alarm” as global capital is increasingly being drawn toward the electronics and artificial intelligence investment cycle across Asia, said Taimur Baig, managing director and chief economist at DBS Bank. Edited excerpts from an interview with ET's Deepshikha Sikarwar.

How do you see the latest developments around the US rejecting Iran’s offer

Despite all the logistical concerns around the Strait of Hormuz, 12-month crude oil futures are still trading at around $100 or below. There is a palpable lack of panic in the markets. So, there is a disconnect between the broader narrative, that we are on the verge of severe shortages in fuel, fertilizers, and petrochemicals, and what markets are actually pricing in.

The Prime Minister’s Office (PMO) is coordinating with various ministries and anchoring efforts to identify fresh opportunities to bolster foreign investments and exports besides reducing non-essential imports as India looks to contain the fallout of the West Asia war on its growth, inflation and current account, officials said.

Senior finance ministry officials are working on steps to relax rules pertaining to the Foreign Exchange Management Act (FEMA), on top of recent changes, and also make bilateral investment treaties more investor-friendly, one of them said.

At a time when the US equity market is hitting new highs and major Asian indices are going through a strong bull run phase, the Indian market has come under a severe bearish spell. Take this, Korea’s Kospi has gained 193% in one year while Taiwan Weighted is up almost 100%. Japan’s Nikkei, the US’ Nasdaq and China’s Shanghai Composite have advanced 66.5%, 40% and 25%, respectively.

Compared to all this, India’s Nifty50 is down more than 6% in one year. In the last two sessions, benchmarks -- BSE Sensex and Nifty50 have fallen nearly 3% each due to a rise in global oil prices and persistent FII selling.

Despite a highly volatile market in the past year Shailesh Raj Bhan, President and CIO (equities), Nippon India Mutual Fund says selling by foreign institutional investors has helped domestic players to buy stocks at reasonable prices. Bhan tells Kushan Shah and Joydeep Ghosh that if an extreme event like oil prices hitting $125 /barrel triggers a sharp correction, core investors may start to sell. Excerpts:

Have the volatile markets made investment decisions more difficult

The last two years were tougher because it was difficult to buy at the right prices. With prices correcting by 20-30% in many segments, partly due to FPI selling, valuations are looking more sensible. Of course, some investors who entered the markets in the last three years or high net worth individuals who need capital for their businesses might be more affected due to this correction.

Global hedge funds ramped up bets on Asia, with weekly buying of South Korean, Japanese and Taiwanese stocks hitting a 10-year high last week, according to a Morgan Stanley client note.

Most of the equities buying "took place outside the U.S. with APAC driving the majority of the activity," said a Morgan Stanley prime brokerage team note that was sent to clients on Friday. It was seen by Reuters on Tuesday.

The hedge fund inflows into South Korea, Japan and Taiwan came from "clients across all regions/all strategies," driving the week that ended on May 7 to be the heaviest week of buying in more than a decade in notional terms, the bank said, without providing specific figures.

Notional buying refers to gross buying volumes.

Global investors have rushed to gain exposure to Asian tech firms as they seek artificial intelligence beneficiaries. South Korea, Taiwan and Japan have emerged as key sites for semiconductor and hardware investment.

Asia's three most valuable companies are chipmakers - Taiwan Semiconductor Manufacturing Co, Samsung Electronics and SK Hynix - and their recent record earnings have put a spotlight on their critical roles in the global AI supply chain.

A new financial year has begun, but for India’s retail equity investors, it hardly feels like a fresh start. The portfolios they have carried into FY27 are under pressure, and the factors that created that stress are far from fading.

The Nifty 50 fell 5.1% in FY26, its weakest annual performance since FY20. It was the worst performer among 15 major global indices. For retail investors, who aggressively embraced equities during the post-pandemic rally, the disappointment was even more pronounced—the Nifty’s two-year compound annual growth rate was a negligible 0.01%.

The growing participation of domestic investors has amplified the impact. Household ownership of listed equities rose from 13% in 2015 to 20% on December 2025. As FY27 unfolds, the question is—what should investors do next

While the monthly SIP contribution reached record highs in February at Rs 32,087 crore, the growth of the number of total SIP accounts in FY26 has slowed down for a second consecutive year. FY26 recorded an addition of 16.07 million new contributing SIP accounts, lower than the 16.57 million additions in FY25 and 20.37 million additions in FY24.

Direct Mode Dilemma
A major reason for this decline has been the drop in SIP account additions through direct investment. While FY24 recorded 10.6 million SIP additions through the direct mode, FY25 saw only 7.1 million additions. In FY26, this number dropped significantly to about 0.927 million, as of February. A significant contributor to this major decline in FY26 was the maturity/closing/pause of 4.28 million direct SIP accounts in April 2025.

The West Asia war is set to slow down handovers in the UAE's otherwise booming under-construction property market, with several developers now staring at delays ranging from six to nine months amid input supply bottlenecks, cost-overruns and tighter bank financing. Of the 45,000 units targeted to be handed over in 2026 in Dubai, about half will be pushed to 2027 or even later, according to data cited by Anarock Middle East. Overall construction cost has gone up by close to 30%, according to industry estimates.

Dubai's under-construction market accounts for nearly 70% of the emirate's total property transactions, driven by strong foreign investor demand, rising migration and aggressive project launches.
The emirate currently has nearly 1,592 active projects under construction comprising more than 482,000 units, with a combined value exceeding AED 366 billion.

A rule Sebi said it wanted to relax has, through interpretation, become tighter. On July 7, 2025, the regulator published a consultation paper conceding that the broad-basing requirement under Regulation 24(b) of the Mutual Funds Regulations had “proven to be a barrier” and had not provided a level playing field to asset management companies (AMCs). On April 9, Sebi issued an interpretive letter that reads the same rule more severely than industry had assumed. The two positions are not easily reconciled.

The letter was issued to UTI Alternatives Private Limited, a wholly-owned subsidiary of UTI Asset Management Company that manages three Category-II alternative investment funds (AIFs). UTI Alternatives asked four questions: does the broad-based fund requirement in Regulation 24(b) apply to management services rendered by an AMC subsidiary to an AIF and its schemes If it does, is compliance tested at the fund level or at the scheme level In a master-feeder structure where feeders do not take standalone investment decisions, is it enough if only the master is broad-based And does the look-through benefit available to specified foreign portfolio investors under the Master Circular extend to similarly regulated domestic entities such as banks, insurers, and provident fund trusts

In recent months, fixed income markets have been navigating a complex interplay of global and domestic forces, forcing fund managers to reassess strategy and positioning. According to Suyash Choudhary, CIO – Fixed Income at Bandhan AMC, the evolving macro landscape now warrants a more defensive stance, particularly on duration.

The ‘Impossible Trinity’ at Play Choudhary explains that the current environment can be best understood through the lens of the impossible trinity—the tension between exchange rates, capital flows, and monetary policy. Over the past year, this dynamic has been clearly visible in India, where external account pressures have constrained the RBI’s ability to maintain a ‘lower for longer’ rate environment.

As a result, he notes that monetary easing has not translated effectively into lower market rates, prompting a more active approach to duration management.

When Norway's $2.2 trillion wealth fund — the world's largest — sells a company's shares over ethical concerns, should it explain why This seemingly simple question has become a dilemma for its guardians, the finance minister told Reuters, as a government commission reviews the rules that have made the fund a global benchmark for ethical investing.

"It is not just about divesting, one must publish a reason," Jens Stoltenberg said in an interview.

"I see that this creates some dilemmas. This is why I am glad we have a commission not only assessing whether we should make divestments, but also the reasoning that can contribute towards reinforcing the impact (of a divestment)."

The sovereign wealth fund established in the 1990s is governed by ethical guidelines set by parliament that ban it from investing in companies that breach human rights or pollute the environment, among other things.

Civil society groups worry that the commission, which is due to present its recommendations in the autumn, may weaken the rules to appease U.S. President Donald Trump.

In November, parliament voted to pause the fund's ethical divestments and ordered the guideline review following intense scrutiny from the United States over the fund's divestment from U.S. company Caterpillar over the use of its bulldozers in Gaza and the occupied West Bank.

Foreign portfolio investors trimmed holdings in Indian equities to a 14-year low, but Goldman Sachs said the heavy selling is nearing its end. In its latest India Strategy report dated May 9, 2026, Goldman Sachs noted that while foreign ownership had fallen below domestic institutions for the first time in over two decades, the next wave of re-entry could take time.

“While the bulk of foreign selling was likely behind us, foreign re-buying could still be impeded in the near-term,” the firm wrote in the report, citing weak earnings visibility and unattractive growth-adjusted valuations compared with North Asia.

Foreign ownership dropped to around 16% in March 2026, slipping below the 17% held by domestic institutional investors such as mutual funds and insurers. The sell-off worth $22 billion this year had already surpassed the full-year record of 2025.

Goldman Sachs has flagged 12 Indian stocks as medium-term alpha ideas even as it warns that the record $22 billion FII exodus from equities this year is unlikely to reverse quickly.

FIIs have sold $22 billion worth of Indian equities so far in 2026, already surpassing last year’s $19 billion outflow and marking the deepest annual exodus in over two decades. On a rolling 250-day basis, the cumulative sell-off now stands at around $30 billion, close to the troughs seen during the 2022 global tightening cycle and the 2025 risk-off phase.

Since the September 2024 peak, FIIs have dumped a cumulative $53 billion of Indian stocks, equal to about 0.9% of listed market capitalisation, exceeding the 2009 global financial crisis outflows, though still shy of the 1% drawdown seen in 2022. “Bulk of foreign selling is likely over,” Goldman Sachs wrote, estimating incremental downside risk to foreign selling at about $4–5 billion even if geopolitical risks such as the Iran conflict were to prolong.