DBT Bureau
Pune, 4 Oct 2026
Indian equities are facing increased pressure as the rise in US Treasury yields changes the global investment equation and makes emerging-market assets relatively less attractive, according to Kedia Advisory’s latest market strategy report.
The US 10-year Treasury yield climbed to 5.34%, while the 30-year yield reached 5.69% by September-end. The sharp rise has increased the global benchmark for required returns, putting pressure on equity valuations, particularly stocks whose earnings are expected further in the future. The report noted that higher yields increase discount rates and reduce the present value of future corporate profits.
The impact is already visible in foreign investor flows. The Nifty 50 fell 6.1% in September to 22,620.45, while foreign portfolio investors (FPIs) withdrew $2.7 billion from Indian equities during the month. Their total equity outflow in 2026 through September reached $26.8 billion.
The rupee is adding another layer of risk. USD/INR was around ₹96.30, its weakest level in about two months, making Indian equity returns less attractive for overseas investors after accounting for potential currency depreciation.
Meanwhile, Brent crude has moved above $100 a barrel, increasing concerns over imported inflation, higher transport and input costs and pressure on India’s external balance. Although strong services receipts have cushioned the impact, the report said India is facing greater external pressure.
Domestic investors are providing some support. Monthly SIP contributions increased to ₹32,297 crore in August 2026, while equity mutual funds recorded ₹27,619 crore of net purchases through September 25. However, Kedia Advisory cautioned that domestic liquidity cannot permanently override weak earnings or expensive valuations.
The report recommends raising the quality threshold and avoiding both panic selling and indiscriminate buying. Investors should closely monitor US yields, crude prices, the rupee, FPI flows and corporate earnings before making fresh allocations.
