Financial

• Indian equities ended their losing streak on August 20, 2026, with the Sensex climbing 628.04 points (0.82%) to 77,537.72 and the Nifty 50 rising 153.55 points (0.64%) to 24,231.85. • The rally was driven by broad-based gains in IT and financial stocks, supported by improved global risk appetite and advances in US indices like the Dow, S&P 500, and Nasdaq. • Positive momentum extended across Asian markets, highlighted by a significant 5.63% rally in South Korea, while the VIX fell by 6%.

• Foreign Portfolio Investors (FPIs) exhibited strong buying activity in the first half of August, marking the fourth consecutive fortnight of inflows into the Indian market. • Investment was primarily concentrated in the financial services, automobiles, and IT sectors, with a notable preference for mid-cap stocks. • Analysts suggest this trend indicates a potential turnaround phase in investor sentiment toward India and a shift toward non-AI allocations.

• Foreign Portfolio Investors (FPIs) significantly increased their investments in the Indian financial services and IT sectors during the first half of August. • Financial services saw the largest surge, attracting Rs 6,535 crore in inflows between August 1 and 15. • IT stocks continued a positive trend from July, drawing an additional Rs 2,530 crore in investment during the same period.

• On August 20, 2026, the UAE suspended all trade and financial transactions with Iran, escalating regional economic tensions. • Simultaneously, Turkey rejected claims made by Israeli Prime Minister Netanyahu as "untenable," accusing him of pursuing destabilizing policies ahead of Israel's October elections. • Israel's military chief of staff, Lt. Gen. Eyal Zamir, issued a warning to Turkey during a visit to troops in Syria, emphasizing the need to prevent military threats on Israeli borders.

• The European Central Bank (ECB) has warned that the eurozone faces a potential financial crisis if the current artificial intelligence investment bubble bursts. • Concerns are driven by the fact that eurozone households have invested approximately €440 billion in US tech stocks, creating significant stability risks. • In a related development, a US tech giant is providing credit capped at $105 billion to fund a data center designed to house over one million AI chips.

• The U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 3.4% annually in July, a slight decrease from June's 3.5% pace. • Monthly inflation saw a modest increase of 0.1% in July, following an unexpected 0.4% drop in June, with both figures aligning with economist expectations. • In corporate news, S&P 500 companies experienced a significant surge in aggregate earnings growth for Q2 2026, reaching 50%.

• Axis Max Life CIO Sachin Bajaj reports that Indian equities are entering a favorable phase driven by recovering earnings, moderate valuations, and strong domestic flows. • Bajaj specifically recommends investing in financials, healthcare, capital goods, digital platforms, and manufacturing beneficiaries, while advising caution regarding overpriced stocks. • Fundamental outlooks have improved as Q1 FY27 earnings growth is exceeding expectations and high-frequency economic indicators signal sustained positive momentum.