Core Insights - India's Consumer Price Index (CPI) inflation for FY26 is projected to be 2.2%, significantly lower than the Reserve Bank of India's (RBI) forecast of 2.6% [7] - CPI inflation reached a 99-month low of 1.54% in September 2025, primarily due to a decline in food and beverage prices [7] - The decline in inflation since October 2024 has been largely driven by the food group, which shifted from a positive to a negative contribution [2][7] Inflation Trends - Although food prices saw a modest seasonal increase since May, favorable base effects have kept year-on-year inflation on a declining path [4][7] - The core CPI, excluding gold, is currently at 3.28% [5][7] - Inflation is expected to drop to around 0.45% next month, suggesting a need for decisive policy action [6][7] Future Projections - Inflation for FY27 is projected to remain lower at 3.7%, indicating ongoing stability in price levels [7] - The RBI risks missing its inflation target if it continues to focus on market fluctuations rather than the evident deceleration in inflation [5][7] - SBI recommends that the RBI should consider rate cuts to avoid falling behind in policy adjustments, especially amid market uncertainties [6][7]

Market Overview - Asian stocks ended mostly lower due to ongoing Sino-U.S. trade tensions and a prolonged U.S. government shutdown, with predictions that it may become the longest in history [1] - Chinese and Hong Kong markets fell as the U.S. and China imposed mutual port fees on each other's shipping firms, escalating the trade war and impacting the global maritime industry [2] - Japan's markets experienced significant losses following the collapse of the coalition government, complicating the fiscal policy outlook [3] Company Performance - In Japan, SoftBank Group, Chugai Pharma, and Furukawa Electric saw declines of 6-7 percent [4] - Samsung Electronics' shares fell 1.8 percent despite reporting stronger-than-expected third-quarter profits driven by robust chip demand [4] - Hanwha Ocean shares plummeted 5.8 percent after sanctions were announced against its U.S.-based subsidiaries by Beijing [5] Sector Movements - Australian markets ended slightly higher, with rare earth stocks gaining due to renewed U.S.-China tensions, while gold prices surged, benefiting gold miners [6] - The tech-heavy Nasdaq Composite rose 2.2 percent as Broadcom Inc. secured a significant data center deal with OpenAI [8] - The S&P 500 and Dow Jones also rallied, with increases of 1.6 percent and 1.3 percent respectively, following a more conciliatory tone from President Trump regarding U.S.-China relations [9]

Core Insights - India's Consumer Price Index (CPI) inflation for FY26 is projected at 2.2%, lower than the Reserve Bank of India's (RBI) forecast of 2.6% [1][2] - CPI inflation reached a 99-month low of 1.54% in September 2025, primarily due to a decline in food and beverage prices [2][3] - The decline in inflation since October 2024 has been largely driven by the food group, which shifted from a positive to a negative contribution [3] Inflation Trends - Core CPI, excluding gold, is currently at 3.28% [4] - Long-term inflation data appears to diverge from the RBI's forecasts, suggesting a need for the RBI to consider rate cuts rather than remaining overly cautious [5] - Inflation is expected to drop to around 0.45% next month, supporting the case for decisive policy action [6] Future Projections - Inflation for FY27 is projected to remain lower at 3.7%, indicating ongoing stability in price levels [6]

Market Performance - The S&P BSE Sensex increased by 210.50 points, or 0.26%, opening at 82,537.55, while the NSE Nifty 50 rose by 57.30 points, or 0.23%, starting at 25,284.65 [1][13] - IT stocks outperformed, with the Nifty IT index up by 0.9%, and HCLTech shares advanced by 1.6% after reaffirming its full-year revenue growth guidance of 3%–5% [2][13] - Broader markets also saw gains, with smallcap and midcap indexes increasing by 0.4% and 0.3%, respectively [3][13] Economic Indicators - India's retail inflation fell to an eight-year low of 1.54% in September, driven by cooling food prices, which has raised expectations for a potential rate cut by the Reserve Bank of India in December [5][6][13] Investment Trends - A shift in investor preference is noted, with large caps outperforming (Nifty up by 1.05%) and small caps underperforming (Nifty Smallcap index down by 4.77%) over the past year [7][13] - Public sector banks have shown significant outperformance (Nifty PSU Bank index up by 16.77%), while IT stocks have underperformed (Nifty IT down by 16.5%) [7][13] - Valuations are highlighted as a key driver of these trends, with IT stocks perceived as overvalued due to structural issues, while PSU stocks are seen as undervalued despite solid growth [7][13] - The expectation is for continued interest in growth stocks, particularly in digital companies and renewable energy, despite high valuations [7][13] Global Market Context - Asian stocks experienced a decline, with trade tensions between the U.S. and China escalating as both nations imposed port fees on shipping firms [8][9][10] - Hong Kong's Hang Seng Index fell by 0.4%, while China's CSI 300 dipped by 0.1%, contrasting with Taiwan's 0.8% gain [10][13] - Gold prices increased by 1.1% to $4,155.90 an ounce, while Bitcoin and Ether saw declines [11][13] Institutional Investor Activity - Foreign Institutional Investors (FIIs) turned net sellers on October 13, offloading equities worth just over Rs 240 crore, while Domestic Institutional Investors (DIIs) remained net buyers, investing Rs 2,333.42 crore [12][13]

Group 1: Global Trade and Economic Outlook - The World Trade Organization has reduced its 2026 forecast for global merchandise trade volume growth to 0.5% from 1.8%, attributing this to the anticipated lagged effects of U.S. tariffs [1] - Economic data indicates that U.S. consumer credit rose by only $0.36 billion in August, significantly below the expected $12.90 billion [2] - Germany's industrial production fell by 4.3% month-over-month in August, much worse than the expected decline of 1.0% [11] Group 2: Market Performance and Sector Movements - Wall Street's three main equity benchmarks closed lower, with notable declines in chip stocks such as Lam Research and Applied Materials, both dropping over 5% [4] - Homebuilder stocks also faced a downturn after Evercore ISI downgraded the sector, with D.R. Horton falling more than 6% [4] - The Euro Stoxx 50 Index increased by 0.36%, driven by gains in mining and bank stocks, while automobile stocks, particularly BMW, fell over 7% due to lowered earnings guidance [9][10] Group 3: Federal Reserve and Interest Rates - Fed officials are divided on the urgency of further rate cuts, with the FOMC having cut interest rates last month for the first time this year [6][7] - Fed Governor Stephen Miran supports continued easing of policy, while Minneapolis Fed President Neel Kashkari warns that sharp cuts could fuel inflation [2] Group 4: Corporate News and Earnings - Advanced Micro Devices rose over 1% in pre-market trading after an upgrade from DZ Bank [14] - Penguin Solutions tumbled over 22% in pre-market trading due to weaker-than-expected revenue and below-consensus guidance for FY26 [15]

Market Overview - U.S. stock futures experienced a slight decline early on October 7, 2025, following a strong rally that pushed the S&P 500 and Nasdaq to record highs [6][20] - The pullback comes after a four-week winning streak, as investors consider extended valuations, political gridlock in Washington, and the potential for a near-term Federal Reserve rate cut [7][19] Technology Sector - Tech stocks are in the spotlight, with AMD shares surging over 25% due to a significant AI chip partnership with OpenAI [3][20] - Tesla's stock rose more than 5% on excitement surrounding its latest self-driving update and hints of a Model Y refresh [3][20] Commodities - Gold prices reached record levels, with spot gold hitting $3,962.63 per ounce and futures touching $3,985.30 per ounce, driven by safe-haven demand amid policy uncertainty [4][18] - The 10-year Treasury yield increased to 4.16%, indicating persistent inflation and cautious optimism [4][16] Market Sentiment - Analysts describe the market as upbeat but fragile, with rising hopes for rate cuts, although valuations appear stretched [4][20] - Key themes for the week include the impact of the Federal Reserve's commentary, effects of the government shutdown, upcoming earnings season, and concerns over high tech valuations [19][20] Premarket Activity - Leading premarket gainers include AMD (+37.49%), Tesla (+0.60%), and several others, reflecting strong momentum and recent news [13][10] - Notable premarket losers include Revvity Inc (-9.86%) and Moody's Corporation (-6.03%), facing selling pressure due to negative news and earnings misses [17][14]

Gold Market - Gold prices have recently surged to record levels, exceeding 4000, but are currently flat [1][2] - Goldman Sachs has raised its gold price forecast for next year to 4900, indicating unprecedented times for the gold market amid political uncertainty in Europe and a US government shutdown [2] - The current market is pricing in a potential rate cut from the Federal Reserve, which could positively impact gold prices [3] Dollar Strength - The dollar has shown strength recently, which is inversely affecting gold prices, as the dollar rises while gold stagnates [5][6] - Political uncertainty in Europe, particularly in France, is weighing on the euro and supporting the dollar [6] - The lack of fresh US economic data may lead to a reassessment of expected rate cuts, potentially further supporting the dollar [6] Tech Stocks - The technology sector is experiencing significant rallies, with the S&P 500 reaching record highs and the Philadelphia Semiconductor index up 6% since the start of the month [8] - The momentum in tech stocks is driven by a flurry of news and deals, particularly in the aerospace sector, with AMD's recent performance contributing to market gains [8] - There are concerns about the sustainability of this momentum if news flow diminishes or if uncertainties in other market areas dissipate [9]

Group 1: Federal Reserve and Economic Conditions - The cryptocurrency market anticipates that Fed Chair Jerome Powell will continue to cut rates, with futures markets indicating a 95% chance of a quarter-point rate cut at the end of the month, a significant increase from previous weeks [1] - The US government shutdown has halted the Bureau of Labor Statistics, resulting in the cancellation of the September jobs report and key spending data, leaving the Fed to operate without fresh data [2] - The unemployment rate has risen to 4.3%, the highest since 2021, with private payroll data indicating 32,000 job losses in September, suggesting a stagflation environment [5] Group 2: Market Reactions and Predictions - The current economic sentiment among US adults is largely negative, with 74% describing conditions as "fair or poor," indicating a lack of confidence in the economy [4] - There is speculation that deeper rate cuts from Powell may not occur until significant layoffs happen, which could lead to defaults on consumer debt [3] - Bitcoin is experiencing increased long-term holder accumulation, with exchange outflows rising by 9% week-over-week, reflecting growing investor conviction [6] Group 3: Asset Class Performance - Gold prices have reached $3,900, and the Nikkei index has climbed 4.3% due to expectations of Japan's fiscal stimulus, positioning Bitcoin as a third safe haven alongside gold and stocks [7] - Total value locked (TVL) in decentralized finance has increased to $82.5 billion, up 11% from the previous month, with Ethereum and Solana leading in inflows [6]

Federal Reserve Insights - Chicago Fed President Austan Goolsbee emphasized the need for caution in rate cuts to balance inflation and employment goals [1] - Dallas Fed President Lorie Logan noted that the central bank is further from its inflation target than its employment goal, advocating for a cautious approach to interest rate cuts [1] - Fed Vice Chair Philip Jefferson stated that future policy rates will be evaluated based on incoming data and evolving outlooks [1] - Fed Governor Stephen Miran indicated a potential revision of inflation outlook if housing costs rise unexpectedly [1] Economic Data - The U.S. ISM services index fell to a 4-month low of 50.0 in September, below expectations of 51.8 [2] - The U.S. September S&P Global services PMI was revised higher to 54.2 from a preliminary reading of 53.9 [2] Market Movements - Wall Street's major equity averages closed mixed, with Humana (HUM) surging over +10% after reaffirming its full-year earnings guidance [3] - Rumble (RUM) jumped more than +15% following a partnership announcement to enhance video discovery with AI tools [3] - USA Rare Earth (USAR) climbed over +14% due to close communication with the White House [3] - Palantir Technologies (PLTR) fell more than -7% after reports of serious flaws in its battlefield communications system, which the company denied [3] Upcoming Events - Investors are focused on developments regarding the U.S. government shutdown and the Fed's latest policy meeting minutes [4][6] - The release of the Fed's minutes from the September meeting is anticipated for insights into policymakers' views on rate cuts [7] - Notable companies including PepsiCo (PEP), Delta Air Lines (DAL), and Constellation Brands (STZ) are set to report quarterly figures this week [10] International Market Developments - The Euro Stoxx 50 Index fell -0.56% due to political turmoil in France following the resignation of Prime Minister Sebastien Lecornu [12] - Eurozone's Sentix Investor Confidence Index came in at -5.4, better than expectations of -7.5, while retail sales rose +0.1% month-over-month [13] - Japan's Nikkei 225 Stock Index closed sharply higher, boosted by the election of Sanae Takaichi as the ruling party leader, with expectations of increased government spending [14]

Market Overview - The market is currently showing resilience despite fears of a government shutdown, with record highs for the Dow 30, S&P 500, and Nasdaq [5] - Anticipation of Federal Reserve rate cuts is driving market sentiment, with expectations that the shutdown will be resolved quickly [5] Company Developments - Fair Isaac Corporation (FICO) saw an 18% surge in stock price following the announcement of a new initiative allowing consumers direct access to their credit scores, negatively impacting competitors like Equifax and TransUnion [5] - Chip stocks, particularly Advanced Micro Devices, Broadcom, and Nvidia, experienced gains due to AI partnerships announced by OpenAI with South Korean companies [5] Economic Indicators - The absence of job numbers today suggests that market trading may rely more on sentiment rather than fundamentals, leading to potential volatility [6] - Crude oil prices have stabilized around the $60 level, contributing to easing inflationary pressures, which is a positive sign for consumer sentiment [6]