Core Viewpoint - Major financial institutions like Citigroup and Goldman Sachs anticipate a rebound in India's markets in 2026 as earnings stabilize and policy support is implemented [1][22]. Market Performance - India's markets have underperformed significantly, with stocks lagging peers by the widest margin in over 30 years and the rupee being the worst performer in Asia [2][22]. - The MSCI India gauge has increased by 8.2% this year, but still trails the broader emerging market benchmark by the largest gap since 1993 [8][22]. Economic Indicators - India's GDP grew by 8.2% in the September quarter compared to the previous year, although the IMF has revised its growth forecast for the next financial year down to 6.2% from 6.4% due to US tariffs [10][22]. - Corporate earnings for the top 100 firms rose by 12% in the September quarter, marking the first quarter without an estimate cut in many periods [11][22]. Currency and Bond Market - The rupee, which hit a record low in November and is down 4.3% this year, may be nearing a near-term floor, with ING Bank identifying it as having the most rebound potential in the region [10][22]. - Sovereign bonds have returned only 2.1%, significantly lagging behind the 8% gain for broader emerging market debt, primarily due to a weaker rupee and expectations of an end to the rate-cut cycle [16][22]. Investor Sentiment - There are early signs of improved sentiment due to growth-supportive measures and a pause in earnings downgrades, with investors considering a rotation out of the artificial intelligence trade [3][9][22]. - Global funds have started to return after pulling over $16 billion from equities earlier this year, with recent inflows of $1.7 billion indicating potential for a larger reversal if conditions improve [19][22]. Central Bank Actions - The Reserve Bank of India has cut policy rates by 100 basis points and engaged in record government debt purchases to ease liquidity pressures [15][22]. - Traders are anticipating another rate cut on December 5, which could lead to significant bond purchases and a potential drop in yields by about 25 basis points [18][22].

Market Overview - Pre-market futures are mixed but showing signs of weakness, following record high closes on the S&P 500, with profit-taking being a potential factor [1] - The tech-heavy Nasdaq is up by 42 points (+0.18%), while the Dow is down 300 points (-0.67%) due to UnitedHealth's DOJ probe, and the S&P 500 is nearly flat at -0.004% [2] Job Market Data - Initial Jobless Claims have decreased for six consecutive weeks, with the latest figure at 217K, the lowest in 14 weeks, down from 250K in early June [3] - Continuing Claims are reported at 1.955 million, slightly above the previous week's revised figure of 1.951 million, indicating a stall just below the 2 million mark [4] Q2 Earnings Reports - American Airlines (AAL) reported earnings of 95 cents per share, exceeding expectations by +20.25%, but shares fell -6% due to warnings of softer demand leading to a Q3 loss [5] - Honeywell (HON) surpassed earnings expectations with $2.75 per share, a +4.2% increase, and revenues of $10.35 billion, but shares are down -2.7% as the company plans to split into three segments by 2026 [6] - Union Pacific (UNP) reported earnings of $3.03 per share, beating expectations by +4.84%, with revenues of $6.2 billion, but shares are down -3% ahead of the opening bell [7] Economic Indicators - Upcoming S&P flash Services and Manufacturing PMI for July are expected to show slight growth in Services to 53.2 and a dip in Manufacturing to 52.7, both remaining above the growth threshold of 50 [8] - New Home Sales for June are anticipated to rise to 645K units, up from 623K the previous month, although existing home sales were disappointing, falling below 4 million for the first time since September [9] Future Earnings Reports - Q2 earnings reports will continue after the market closes, with Intel (INTC) and Deckers Outdoor (DECK) among the companies set to report [10]