New Delhi– Domestic equity markets gained momentum this week, buoyed by strong macroeconomic data showing India’s economy expanded by 7.8 percent year-on-year in the first quarter of FY26 — the fastest pace of growth in five quarters, according to a report released Wednesday.
The latest data signaled robust economic health, supported by surging service sector activity. The Services Purchasing Managers’ Index (PMI) climbed to 62.9 in August 2025, its highest level in more than 15 years, driven by a sharp increase in new orders and resilient demand.
“Sentiment was further boosted as the GST Council simplified the existing four tax slabs (5, 12, 18, and 28 percent) into a two-rate structure of 5 percent and 18 percent — and proposed a special 40 percent slab for select luxury items such as high-end cars, tobacco, and cigarettes,” ICRA Analytics said in its report.
The rally gained additional strength after the U.S. Federal Reserve delivered its first rate cut of the year in September, citing softness in the labor market. However, overall gains were limited by lingering uncertainty surrounding India–U.S. trade negotiations and continued foreign institutional investor outflows.
The report also highlighted encouraging trends in mutual fund performance. In the equity mutual fund segment, all categories posted positive average returns over the three-, five-, and ten-year periods. Small-cap funds delivered the highest category average returns over both the five- and ten-year periods, while large-cap funds recorded a negative category average return of about 4.92 percent over the past year.
In the debt mutual fund category, credit risk funds delivered the strongest average returns over six-month, one-year, three-year, and five-year horizons. Low-duration funds provided the highest average one-month return at 18.57 percent.
Overall, all debt fund categories generated positive returns across the one-, three-, five-, and ten-year periods, reflecting sustained investor confidence and stability in fixed-income instruments. (Source: IANS)
