Indian bonds are facing mounting pressure as global yields surge and foreign investors exit domestic holdings. The 10-year US Treasury yield reached its highest level in nearly two decades, with markets pricing in over a 90% chance of a Fed rate hike — the first since 2023. Foreign investors sold 47.3 billion rupees ($490 million) of index-eligible government bonds on Friday, the largest single-day exit since April 2025 and the second-largest in at least three years, per Clearing Corp. of India data. The yield gap between Indian bonds and US Treasuries shrank to its narrowest in over two decades, compounding the sell-off ahead of the RBI's planned sovereign note sales to drain excess cash from lenders.

In equities, the NSE Nifty 50 Index fell to a five-month low, with small- and mid-cap shares declining even more sharply amid elevated crude prices and weak global sentiment. India's August trade deficit narrowed beyond expectations on strong export growth. In pharma, the market grew 13% year-over-year to 248 billion rupees in August, led by Dr Reddy's at about 22%, according to ICICI Securities.

Meanwhile, Amazon's quick commerce unit is on track for $1 billion in annual sales, intensifying competition with Zepto, Eternal, Swiggy, and Flipkart in India's instant-delivery race.