Q2 FY 2026 (July–September) unfolded as a quarter of stark contrasts for Indian markets—a resilient climb amid mounting headwinds that tested the mettle of investors and economies alike. Starting from the elevated close of 25,517 on the Nifty in late June, the index navigated a volatile path influenced by escalating global trade frictions and domestic policy transitions. Early optimism from lingering Q1 momentum gave way to jitters as U.S. President Trump’s aggressive tariff escalations in August triggered sharp sell-offs, with the Nifty dipping to intra-quarter lows around 24,337 amid fears of export disruptions. Yet, in a classic display of India’s structural buoyancy, the benchmark rallied back, closing the quarter at approximately 24611—a modest loss of 3.6% quarter-on-quarter. This muted performance, down sharply from Q1’s robust 8.5% surge, underscored how external shocks can temper even the most promising growth narratives, but it also highlighted the market’s ability to stabilize through domestic anchors like policy reforms and sectoral rotations.
The quarter’s narrative was dominated by two seismic global events: the intensification of Trump’s tariff regime and lingering geopolitical ripples from ongoing conflicts. On August 27, the U.S. doubled tariffs on Indian imports to 50%—a punitive measure layered atop an initial 25% levy from early August, ostensibly to pressure New Delhi over discounted Russian oil purchases amid the protracted Ukraine war hitting sectors like textiles, gems & jewellery, pharmaceuticals, and auto components hardest—key pillars accounting for nearly a third of shipments to America’s shores. Exporters rushed shipments pre-deadline, but the fallout was swift: Indian shares tumbled and FII outflows accelerated, exacerbating rupee depreciation to 88.7 against the dollar by quarter-end.
Yet, silver linings emerged from these clouds. Gold, ever the haven in turbulent times, extended its stellar run, touching intra-quarter highs above $3871 per ounce in mid-Sep before settling around $3,858 by late month-end—an unprecedented 21% quarterly gain that reinforced its decade-defining bull market. This rally not only cushioned portfolios but amplified the case for diversified asset allocation, as investors sought refuge from equity volatility. On the U.S. front, while the “Trump trade” had buoyed Wall Street in Q1 with broad-based gains, Q2 saw a more tempered performance: the S&P 500 advanced about 7.8%, outpacing India’s Nifty but signaling a slowdown in the post-election euphoria as tariff blowback raised stagflation fears. Emerging markets like India bore the brunt of dollar strength and policy uncertainty, with OECD projections trimming FY26 growth to 6.3–6.8% amid heightened trade barriers and global slowdown risks.
Domestically, the GST 2.0 reforms—unveiled on Independence Day and fast-tracked via the 56th GST Council meeting on September 3—provided a timely counterbalance. However, the pre-rollout uncertainty led businesses to defer purchases, shifting robust Q3 demand expectations and contributing to the quarter’s consumption slowdown. This “wait-and-watch” dynamic, while short-term dampening, positions India for a consumption-led rebound, aligning with the long-term story of structural reforms driving 6.5%+ GDP growth. Sectorally, the rotation was telling. Autos and metals zoomed while Capital markets Defence and Real Estate were pushed down. IT also lost significantly on the fear of H1B visas and service sector tariff threats.
Within Weekendinvesting strategies, performance mirrored the quarter’s cautious tone. The Mi Evergreen and Allcap Gold continued to lead with steady minor gains against benchmarks, their momentum filters adeptly sidestepping tariff-induced drawdowns in vulnerable names and making the most of their Gold allocation. Other strategies posted flat to slightly negative returns. Over eight-plus years, this non-discretionary ethos has delivered superior long-term CAGRs, backed by thousands of client testimonials and a track record of self-correction through cycles.
Looking ahead, the forecast tilts toward guarded optimism with a bias for consolidation. Tariff negotiations could drag into Q3, but GST 2.0’s festive tailwinds and potential U.S. trade deal breakthroughs offer upside catalysts. Global supply chain resets persist, but India’s domestic demand fortress—fueled by a young demographic and policy agility—should insulate us. We anticipate Nifty trading in a 24,500–26,000 band, with rotations favoring defensives and reform beneficiaries.
At Weekendinvesting, we’re steadfast on our path, fully invested across strategies—a bullish signal amid ample opportunities. Our self-healing momentum frameworks are built for such resets, turning volatility into alpha over time. This quarter, we’ve amplified our commitment to you. YouTube content has exploded with daily Shorts alongside Daily Byte. Our newsletter now features weekly momentum deep-dives, and the new asset allocation strategies launched in this quarter are already seeing strong uptake for balanced portfolios. We have also launched a US portfolio on the Vested platform offering superior research for US markets as well.
Exciting horizons await: Our Alternative Investment Fund debuts next quarter for HNIs, unlocking pooled efficiencies and manager oversight for superior execution. Stay tuned for details.
We remain unwavering bulls on India’s multi-decade journey—growth, liquidity, and momentum will reward the patient. Stick to the strategy, and let’s navigate these walls of worry together. As always, your success is our mandate.
