Export view - By Srishti Mendiratta

 

UPI's Zero-MDR Era May Be Nearing a Turning Point

Merchant Discount Rate, or MDR, is the fee a merchant pays each time a customer pays digitally, whether by card or through a payment app. Banks and payment companies charge it to cover the cost of running the systems that move that money instantly and securely. Debit and credit cards have always carried this fee. UPI never has. Since January 2020, the government made UPI transactions free for merchants, and that decision is a big part of why India's real time payments system grew into the largest in the world by transaction volume.

That zero MDR era may be nearing a turning point. The Lok Sabha recently passed the Taxation and Other Laws Amendment Bill, 2026, creating a legal framework that would allow the government to decide which digital payment methods remain exempt from Merchant Discount Rate (MDR). Once the Bill becomes law, the government can notify a negative list of payment modes that will continue to remain MDR-free, while payment modes outside that list could become eligible for MDR if charges are notified. The Finance Minister has already clarified that any such fee would apply only to merchants and not to end users and that no final decision has been taken yet.

Media reports citing government sources suggest the levy under discussion could fall between 0.25% and 0.4%, likely applied to merchant transactions above ₹2,000. This range hasn't been officially confirmed by the RBI or the Finance Ministry, so it should be read as a reported estimate rather than a settled number, but it gives a useful sense of scale for what's on the table.

Banks have effectively run UPI's merchant side as a cost centre since 2020, absorbing infrastructure and processing expenses without any fee to offset them, meaning every merchant transaction processed has added to their costs without adding to their revenue. Even the lower end of the reported range, 0.25% on transactions above ₹2,000, could generate roughly ₹17,416 crore a year across the sector, going by recent monthly transaction data. At the upper end of 0.4%, that figure would scale to somewhere in the region of ₹27,800 crore. For banks with a sizeable digital payments book, this would turn UPI from a volume heavy, margin light business into one with a real fee income component attached.

Payment aggregators and fintech platforms, the app layer merchants actually transact through, are in much the same boat. An MDR in this range would let them start recovering costs they've carried for years, though how much of that benefit actually reaches them versus banks depends on how any fee eventually gets split and that detail hasn't been worked out yet. If anything, this is the segment most exposed to the outcome, since UPI volumes sit at the core of these platforms' business models in a way they don't for larger, more diversified banks.

Merchants sit on the other side of this. One reported model would apply MDR only to transactions above ₹2,000 made to businesses with annual turnover exceeding ₹1.5 crore, meaning smaller merchants below that threshold could stay exempt altogether. If that structure holds, the real burden falls on larger, high-turnover businesses rather than small shopkeepers and street vendors. Industry bodies have raised a related concern, though: a turnover cutoff draws a hard line where the underlying economics are actually quite similar on both sides of it. A business just above ₹1.5 crore in turnover isn't necessarily better cushioned or more profitable than one just below it. Officials have said the fee itself would likely be small, but for businesses already running on thin margins, even a small new recurring cost changes the math in a way it simply wouldn't for a bigger retailer with more financial cushion.

For retail investors, the point isn't that MDR is coming, it's that this has stopped being a purely hypothetical debate. A reported rate range now exists, even if unconfirmed, giving banks and payment platforms a genuinely plausible path to new fee income, while leaving merchants to absorb the other side of it. Nothing is finalized, and the steering committee's decision is still pending, but the range under discussion explains, in fairly concrete terms, why every part of this ecosystem has real skin in the game.

By Srishti Mendiratta | SEBI-Registered Research Analyst – INH000024295

https://wealthminds.co.in/

investor@wealthminds.co.in

Export view - By Srishti Mendiratta

 

The Limits of Artificial Intelligence and the Value of Human Judgment

Sit through enough earnings calls and you'll hear the same line, said in a dozen different ways: AI is making businesses faster. And it's true. Tasks that took weeks now take days. Teams that needed ten people now run on three. The efficiency gains are showing up in real results, not just in slide decks.

What matters more for an investor is a different question: how much of that speed can you actually trust, and where does someone still need to be watching over it? AI is genuinely good at work that's repetitive and data-heavy, the kind with clear rules. But give it a task that depends on trust, context, or judgment and the risk doesn't go away. It just gets harder to see. Look closely across sectors and the same pattern keeps showing up. The businesses building lasting returns from AI aren't always the ones moving fastest. They're the ones who've figured out where to stop and let a person take over.

Cybersecurity is the clearest place to see this, because AI is helping both sides of the fight. India averaged 3,195 cyberattacks per organization every week in 2025, according to Check Point Software's 2026 report and much of that rise came from AI tools that let attackers scan networks and find weaknesses with barely any human help. Defenders had to respond in kind. Indian firms blocked over 9 billion attack attempts last year, up 27 percent from 2024, because past a certain point, only a machine can keep up with another machine.

Here's the part that should worry boards more, though. AI isn't just a tool that attackers pick up. It's starting to cause damage on its own. In July 2026, OpenAI admitted that one of its experimental models slipped out of a test environment on its own, with no human telling it to and reached a live production system belonging to Hugging Face. The model got in using stolen login details plus a security gap nobody knew about and Hugging Face's own CEO said he had never seen anything quite like it. This wasn't a one-off, either. OpenAI's own hacking test score had already jumped from 27 percent to 76 percent in just three months earlier that year. Put the two together and it's hard to treat AI safety as just an IT problem anymore. It belongs in the boardroom now.

HR shows a quieter but honestly more telling version of the same story. Two out of three Indian companies already use AI somewhere in HR, yet fewer than half have written any usage rules, and a quarter have no framework at all. Barely a third are seeing real productivity gains, even though most expect AI to be central to daily work within a few years. In simple terms, everyone adopted the tool before checking if it actually worked. That tracks, because hiring was never just a data problem. Judging character, fit, and honesty is hard even for a person. It's harder still for a system that has never met anyone.

Marketing runs into the same wall. Content made entirely by AI performs about four times worse than content where a person is genuinely involved in shaping it. Nearly three out of four Indian businesses got no real return from their AI content spend, mostly because they published it without anyone checking it first. The tool did its job fine. The problem was skipping the human review.

Real estate adds one more example. Proptech platforms can lift sales speed by 30 to 50 percent, according to an EY-Parthenon-CREDAI report. But buying a home still comes down to trust, negotiation, and small personal preferences that don't show up cleanly in any data. AI can narrow down the choices. It can't close the deal on its own, at least not yet.

Looking at the bigger picture, the lesson is fairly simple, even if the details change by sector. AI earns its place wherever the work is repetitive and speed matters most. It gets shakier the moment a decision needs judgment, accountability, or a real read on people. That's the signal worth watching if you're allocating capital. The first wave of AI adoption rewarded whoever cut costs the fastest. The next wave will likely reward something quieter: knowing exactly when to hand the decision back to a person.

That's the real test, not how much AI a company has adopted, but how honestly it has admitted what AI still can't do. The businesses that pass that test now are the ones likely to still be standing once the trial runs stop making headlines and the results start getting counted.

By Srishti Mendiratta | SEBI-Registered Research Analyst – INH000024295

https://wealthminds.co.in/

investor@wealthminds.co.in

 

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50x growth in 26 years: how India's markets really changed

In March 2000, three sectors, Materials, Consumer Discretionary and Industrials, made up nearly 63% of all companies in the Nifty 500. Today, that has changed. Financials, Health Care and Technology now lead the index, while the old commodity-heavy sectors have a much smaller role. This shows how much the Indian economy has changed over the last 26 years, and it is worth knowing, well beyond this quarter's results.

Looking at the numbers, Nifty 500 companies together are worth nearly 50 times what they were in March 2000, up from Rs 7.3 lakh crore to Rs 372 lakh crore by March 2026. That works out to a compounded growth rate of 16.3% a year. And it was not a smooth ride. Markets fell 33.6% during the global financial crisis and another 24.2% during the Covid crash. But both times, the recovery came and the climb resumed, powered by stronger earnings, easier liquidity and simply more people, retail and institutional alike, showing up to invest.

Now, which sectors actually drove this? Financials is the clearest winner. It went from a modest 8% of the index by company count and 7% by market value in 2000, to 20% and nearly 26% respectively by 2026, making it the single largest sector in the index for over a decade running. It even overtook Energy as India's biggest revenue generator in FY25, breaking a two-decade streak. Healthcare and Utilities grew too, riding rising incomes and the infrastructure and power buildout. Meanwhile Consumer Staples' share nearly halved, from 13.2% to 6.5%, while Consumer Discretionary climbed from 5% to 11.3%. Basically, as Indians got richer, spending tilted from the daily essentials toward the things we actually want to buy.

Here is the part I find genuinely encouraging. Profits grew faster than sales. Between FY03 and FY26, Nifty 500 companies grew their sales 21 times over, but their profits grew 31 times over. Margins improved from 6.0% in FY00 to a record 10.9% in FY26. So companies are not just doing more business, they are keeping more of what they earn. And they have gotten bigger too. What it takes to even qualify as a large-cap company today is 122 times higher than it was in 2000. The mid-cap bar has risen 180 times.

One number really stands out. In FY18, the top 50 companies in the Nifty 50 earned 87% of all profits made across the entire Nifty 500. By FY26, that share had fallen to 51%, roughly half. This means profit growth is no longer coming from just a handful of large companies. It is spreading out to many more companies across the index and this pattern shows up clearly across other measures of market concentration too.

In conclusion, market that has not just gotten bigger over 26 years, it has gotten deeper and more broad-based. For anyone investing with a long horizon, that matters. It means India's growth story today is standing on a wider, sturdier base than it was two decades ago and that tends to hold up better across the inevitable ups and downs of a business cycle

Source: NSE Market Pulse, July 2026

By Srishti Mendiratta | SEBI-Registered Research Analyst – INH000024295

https://wealthminds.co.in/

investor@wealthminds.co.in

Export view - By Srishti Mendiratta

 

Q1 FY27 Earnings: The Story So Far

The Q1 FY27 earnings season is underway, and the first wave of results is already offering a useful read on the health of India's economy. Banking, IT, financial services, and select names from the automobile and cement sectors have reported their June quarter numbers, while several heavyweight sectors including metals, large-cap pharma, FMCG and energy are yet to come over the next two weeks.

Even at this early stage, one trend is already clear: the market's expectations have risen sharply. Companies delivering solid earnings aren't necessarily seeing their stock prices reward them for it, while even minor disappointments or cautious management commentary are triggering sharp corrections. After months of stock-specific gains, investors are using the earnings season to reassess valuations rather than simply celebrate profit growth.

Across the companies that have reported so far, revenue growth has generally remained healthy, operating discipline has largely held, and businesses are navigating an uncertain global backdrop reasonably well. But the quality of earnings and, more importantly, management guidance for the quarters ahead has mattered far more than the headline profit number this quarter.

Private banks delivered healthy profitability again, supported by steady loan growth and broadly stable asset quality. Yet the market reaction has stayed muted. Attention has shifted toward net interest margins, deposit costs and the earnings outlook following recent rate moves, rather than what already happened last quarter. Several banks saw profit-booking even after respectable results, a sign of just how elevated expectations have become.

IT has told a similarly mixed story. Companies continue to benefit from healthy deal pipelines and growing AI-linked opportunities, but client spending remains selective, and profit growth within the sector has ranged widely even where revenue growth looked steady. Investors have rewarded execution and margin discipline over simply meeting estimates. The gap between a company that grew revenue but not profit and one that expanded both  qqhas driven very different stock reactions this quarter.

Among the sectors that have reported so far, select automobile companies have delivered a healthy start to the earnings season, supported by premium demand, export growth and improved operating efficiencies. However, with several major passenger vehicle manufacturers yet to announce their results, it is still too early to draw conclusions about the sector as a whole.

A few cement companies have also reported their June quarter performance, with results showing a mixed picture. While some companies benefited from strong execution and healthy profitability, others faced pressure on margins due to higher input costs. With most of the sector yet to report, a clearer trend will emerge over the coming weeks.

Financial services and NBFCs, meanwhile, have shown one of the widest spreads of outcomes so far, from steady double-digit growth at established players to sharply higher profit at newer, faster-scaling businesses still working off a smaller base.

With only a handful of pharmaceutical companies having reported so far and most major metal producers yet to announce their numbers, it is still too early to draw sector-wide conclusions. Their results over the coming weeks will provide a much clearer picture of export demand, pricing trends and margin resilience, making them among the most closely watched sectors this earnings season.

What stands out across all of this is how selective the market has become. When valuations are already stretched, simply meeting expectations isn't enough. Investors are rewarding companies that meaningfully beat estimates, expand margins or raise guidance, and punishing even small misses. Earnings quality has taken precedence over earnings quantity.

Beyond the results themselves, macro currents are amplifying these reactions. Crude oil has stayed volatile on geopolitical tensions, global rate expectations keep shifting and FII flows have turned more selective a mix that makes management commentary and forward guidance almost as influential on stock prices as the reported numbers.

Only the opening phase of this season has played out but the early signals are constructive. Corporate profitability looks healthy, balance sheets remain robust and domestic demand continues to support most businesses. At the same time, investors are becoming more disciplined about how they value growth, weighing sustainability and forward visibility more heavily than any single strong quarter.

Over the next two weeks, results from metals, pharma, FMCG, the remaining cement companies, telecom, energy and the rest of the automobile sector will fill out a more complete picture of how corporate India performed in the first quarter of FY27. These results are likely to shape sector leadership and determine the market's direction for the remainder of the quarter.

For investors, the message so far is straightforward earnings remain resilient, but the market has grown considerably more demanding. In this environment, it's not just businesses delivering strong numbers that will stand out, but those that can convincingly demonstrate that this quarter's momentum is sustainable.

By Srishti Mendiratta | SEBI-Registered Research Analyst – INH000024295

https://wealthminds.co.in/

investor@wealthminds.co.in

 

 

Export view - By Srishti Mendiratta

 

Oil's Buffer Is Running Thin And Why That Should Worry Every Investor

Crude oil is back in the headlines and this time it's not just about the price climbing. It's about the safety cushion behind that price and that cushion has gotten thinner than most people realise. For India, which buys most of its oil from abroad, this isn't an abstract global story, it hits the rupee, inflation and eventually your budget.

What's happening globally

The shaky US-Iran peace deal took a hit on July 7, when both sides traded fresh attacks. Brent futures have since climbed 22% and Dated Brent (oil priced for immediate delivery) is up 21%. Back in March, when the Strait of Hormuz was first shut. Dated Brent had jumped 45% in ten days and buyers paid a record $35.87/barrel premium over Brent futures just to secure oil quickly. This time, the reaction has been calmer. The backwardation, the gap between near-term and long-dated Brent contracts, has widened to only about $10/barrel, nowhere close to the record $42.99 seen at the peak of the March crisis. For now, the markets seem to be pricing in caution rather than an actual scramble for oil

Why fuel prices are the real story

Even after crude cooled off following the June 18 peace deal, the crack spread, the gap between crude prices and what refined fuels like petrol and diesel sell for was largely unaffected It's now at an all-time high of $69.16/barrel. That tells you refined fuel is actually scarcer than crude oil itself right now. Part of the reason is Russia-Ukrainian strikes have knocked out a chunk of its refining capacity and Moscow has restricted fuel exports too. Longer shipping routes are burning more fuel just to move cargo around. Global refinery output was down roughly 6 million barrels a day in June compared to last year.

The world's oil buffer is shrinking

In March, the world got through the first shock by leaning on buffers, extra oil in storage, the Strategic Petroleum Reserve (SPR), spare production capacity and softer Asian demand. Those buffers look thinner today. The US has drawn down 145 million barrels of its combined SPR and commercial stock since March. OECD inventories outside the US are projected to fall from 1,543 million to 1,303 million barrels by Q3 2026. OPEC's spare capacity has collapsed from 3.43 million barrels a day in 2025 to just 0.44 million barrels a day now and it's nearly zero in West Asia. Storage at Cushing, Oklahoma, a major US hub, is nearing "tank bottom", meaning some of that inventory isn't really usable. Global energy watchdogs warn the world may have only weeks, not months, before a prolonged Hormuz disruption starts causing real economic damage.

What this means for India

India imports over 85% of the crude it uses, so this isn't a story we can watch from the sidelines. Every $10 rise in crude adds an estimated $14-16 billion to the country's annual oil import bill. That outflow tends to pressure the rupee, which briefly slid to around ₹92-95 per dollar during the earlier Hormuz scare this year. A weaker rupee makes every other dollar-priced import costlier too, adding to inflation. Retail inflation crossed 4% in June, its first breach of the target band in 17 months.

Fuel-heavy sectors like aviation, paints, chemicals and logistics tend to see margins squeezed when crude runs up. Upstream oil and gas producers usually benefit. Good news is, India's oil-import dependency, as a share of GDP, has fallen from around 6.8-7.3% a decade back to roughly 3.8% now, giving the economy more room to absorb a shock than in past cycles.

What could happen next

If things stay contained, oil prices likely just keep carrying this risk premium without running away further. But if Iran opens another front, say through the Bab-el-Mandeb Strait, or Chinese demand picks up sharply, that cautious premium could turn into an actual shortage. Prices could then not just retest the earlier peak of $119.50/barrel, they could blow past it and India would feel it through a heavier import bill, a softer rupee and stickier inflation.

Bottom line

Oil prices work their way into transport costs, inflation, the rupee and eventually your own portfolio. The cushion that absorbed the last shock is thinner now, so the next one, if it comes, could land harder and faster. Worth tracking closely over the coming weeks.

By Srishti Mendiratta | SEBI-Registered Research Analyst – INH000024295

https://wealthminds.co.in/

investor@wealthminds.co.in

Export view - By Srishti Mendiratta

 

REITs: A Smarter Way to Invest in Real Estate

Real estate has always been a favourite asset class for Indian households, but buying a flat or an office space needs a large sum upfront, and selling it isn't quick either. REITs or Real Estate Investment Trusts solve both problems, letting you invest in real estate the way you'd buy shares.

What is a REIT?

Income-generating real estate, mostly offices, shopping centres and warehouses, is owned and managed by a REIT. It makes you a part-owner without the trouble of tenants or maintenance by collecting rent from renters and distributing the majority of that revenue to investors on a monthly basis.

India's REIT journey started in 2019 with the launch of Embassy Office Parks REIT. As of June 2026, six listed REITs reached a total market capitalization of nearly ₹2.1 lakh crore, rising from approximately ₹60,500 crore five years earlier.

 

What kind of properties do they own?

India's REITs fall into three main categories. Office REITs are the largest, with about 164 million square feet across cities like Bengaluru, Hyderabad, Mumbai and Delhi NCR with the occupancy between 90% and 99%. Then the retail REIT that owns malls with roughly 10.5 million square feet operational and footfalls over 137 million in FY2026, up 7% year-on-year. Thirdly, the industrial and warehousing InvIT holds about 21 million square feet, primarily leased to logistics and e-commerce companies.

 

Why should a retail investor care?

Three reasons stand out. REITs offer access to high-quality, professionally managed commercial real estate without the large capital direct ownership demands. They offer built-in liquidity, since units trade on the exchange within seconds, unlike a physical property. And they must distribute most rental income to unitholders, translating into annual distribution yields of 5% to 7%. Since listing, several REITs have delivered returns from about 9% to over 50%, generally holding up better than broader real estate indices in weaker phases.

 

As a result, retail interest has increased. Since FY2022, unitholders have increased by about four times, reaching 300,000 by FY2026 due to a regulation change that began in January 2026 and classified REITs as mutual fund equity holdings.

 

What factors are influencing REIT performance currently?

The basics of commercial real estate have improved in recent years. Demand from Global Capability Centres (GCCs), tech companies, and flexible workspace providers has sustained high occupancy rates, while rental increases have stayed robust throughout most major office markets. This has resulted in consistent rental income and cash flows for numerous publicly traded REITs, facilitating regular payouts to shareholders.

 

Why REIT demand is likely to keep rising?

Demand could stay strong because REITs still own only a small share of the real estate they could potentially own. Office REIT penetration across India's top seven cities rose from about 11% in 2021 to 19% by Q1 2026. Of the roughly 854 million square feet of Grade A office stock in these cities, only 164 million square feet sits under existing REITs, while another 370 million square feet, nearly 43% of existing inventory, is considered suitable for REIT, with Hyderabad and Bengaluru holding the biggest share. Industrial and warehousing penetration is even lower at 4% to 5%, projected to reach 7% to 10% by 2030, while Tier II and III cities are also expected to play a larger role as infrastructure improves and institutional-quality assets emerge.

This points to a structural, multi-year opportunity, as more buildings get added through acquisitions and new listings, and formats like data centres, student housing, and senior living emerge over time.

On the flip side, like any market-linked investment, REIT prices can fluctuate and past performance doesn't guarantee future returns. Office demand, interest rates, and occupancy levels can all influence performance, so it's worth understanding these dynamics or speaking with a financial advisor, before allocating a meaningful portion of your portfolio here.

REITs have quietly become a practical way for everyday investors to access India's commercial real estate story and rising penetration suggests plenty of room left for this market to grow.

By Srishti Mendiratta | SEBI-Registered Research Analyst – INH000024295

https://wealthminds.co.in/

investor@wealthminds.co.in

 

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India's Inflation Just Hit a 17-Month High: Here's What to Know

According to data issued on July 13 by the Ministry of Statistics and Programme Implementation (MOSPI), retail inflation in India increased to 4.38% in June 2026 from 3.93% in May, a 17-month high. A few days later, wholesale inflation verified the same pattern: the Producer Price Index increased to 9.6% from 9.4% and the Wholesale Price Index (WPI) increased to 9.9% in June from 9.7% in May.

Sharp increases in vegetable costs caused food inflation on the retail side to rise from 4.78% to 5.32%. After being stable the previous month, transportation expenses increased to 4.31%, indicating that fuel prices are being impacted by the Middle East energy shock. In comparison, housing inflation remained low at 2.10%. An official government statement identified food items, chemicals, basic metals and mineral oils (petroleum products) as the primary drivers on the wholesale side.

Rural vs urban: a different story

Category	Rural	Urban
Overall CPI	4.74%	3.92%
Food	5.45%	5.09%
Housing	2.66%	1.90%
Transport	4.37%	4.24%

Rural India is running hotter on almost every count. Rural households spend a larger share of their budget on food, so a food-led inflation spike hits them harder in real terms, especially given typically less steady rural incomes. It can also mean weaker rural demand for non-essential goods ahead, worth watching given how much of India's consumption story depends on rural spending.

Urban inflation has its own story. Urban housing costs, though lower than rural, are still rising. And city incomes, largely tied to fixed salary cycles, tend to adjust more slowly to price changes than farm incomes, which move with crop prices.

Why should you care?

Inflation isn't just a number in a government report. It quietly reshapes several things that affect your money.

1. Your real returns shrink. If your fixed deposit pays you 6.5% and inflation is running at 4.38%, your actual purchasing power only grows by around 2%. As inflation rises the "real" return on safe instruments like FDs and savings accounts gets thinner.

2. Interest rate and borrowing cost expectations shift. The RBI targets inflation within a 2 to 6% band, with 4% as the ideal midpoint. At 4.38%, we're still inside the comfort zone, but the upward trend makes it harder to justify rate cuts, which could delay relief on loan EMIs. Rising inflation also tends to push bond yields higher, since investors demand more compensation for the erosion in future purchasing power.

3. Everyday spending power takes a hit first. Since food carries the largest weight in India's consumption basket and food inflation is running above the headline number, essentials are getting costlier faster than overall prices suggest, squeezing money left over for discretionary spending.

4. Precious metals' appeal as a hedge grows. Silver jewellery prices rose 133.21% year-on-year in June, while gold, diamond and platinum jewellery rose a combined 36.82%. Such sharp moves often reflect households leaning on precious metals as a store of value when inflation is seen eroding cash and fixed-income returns.

The bigger picture

One month of higher inflation doesn't rewrite India's economic story, but the retail and wholesale prints moving together is worth watching, especially heading into the RBI's next policy review. The next CPI print is due August 12. Until then, oil prices and monsoon progress will likely decide where inflation and your money's real value goes next.

By Srishti Mendiratta | SEBI-Registered Research Analyst – INH000024295

https://wealthminds.co.in/

investor@wealthminds.co.in