Financing 2026: Key Financial Headlines from India and the World (28 Dec 2025-3 Jan 2026)
As we enter into 2026, with the change in calendar years globally and within India, the Financial systems across both geographies demonstrated strength in the face of much uncertainty regarding currency pressures in India, equity outflow globally and in India, and blockbuster merger activity across the globe, in addition to continued discussions through policy initiatives that are having a significant influence on the markets. For finance professionals and finance profession aspirants, it is essential to understand how these changes will impact future finance careers. Understanding how capital is flowing, corporate strategies are being developed and the macro-economic trends will aid them in developing the skill set that will make them successful in the finance industry. Skills such as those included in an Investment Banking course and the framework of Financial Modeling.
This edition of the Market Brief, recap the most significant developments affecting the Capital Markets, Strategic Deal Making, Currency Dynamics, and Policy Expectations.
India – Weakness in the Indian Rupee and Financial Flows Affecting the Year Ahead
The End of 2025 Marking a Large Decline for the Indian Rupee
The Indian Rupee entered the New Year (2026) on a weak note following a significant decline in the value of the Rupee during 2025. In fact, during 2025, the Indian Rupee lost approximately four-and-a-half percent (4.5) against the U.S. Dollar, primarily due to large foreign equity outflows, a change in exporter sentiment, and macroeconomic pressures.
While the currency was hovering around the 90 mark against the US dollar in early January, traders indicated that, due to thin trading volumes over the Christmas period, volatility remained high. The continuing demand from corporations for US dollars as well as earlier withdraws from equity markets have made the currency an early focal point for analysts tracking India’s external balance in 2026.
On one hand, all these movements in the currency can directly impact corporate net earnings, import costs, risk premiums, and also the inflows and outflows of foreign institutional investments into India (FIIs). As such, for many aspiring Finance professionals seeking to develop their financial modelling skills, particularly for Emerging Markets, incorporating currency variables into their valuation models, forecast models, and modelling of various scenarios, is a critical element.
One of the most notable themes to emerge in the market towards the late part of 2025 was the record net exits of Foreign Institutional Investors (FIIs) from Indian equity markets during the period. Withdrawals of ₹1.58 lakh crores highlight the level of risk aversion currently prevailing within the market and the process of portfolio rebalancing by FIIs towards Developed Countries.
Many analysts retained their optimistic outlook for 2026, assuming monetary measures at the global level reduce and domestic GDP growth remains strong. For many aspiring Financial Analysts and Bankers, converting this type of flow data into forecast data will be a core part of their valuation work and Capital Markets related activity. Such forecasts form an essential component of an Investment Banking programme.
Banking Sector Outlook: Bad Loans Set to Fall, but New Risks Emerge
India’s banking sector continues to show strength, with the Reserve Bank of India (RBI) suggesting that gross non-performing loans (NPLs) may continue to decline from already low levels. However, non-bank lenders are flagged as a source of rising risk due to growing credit intermediation outside traditional banking channels.
This complex credit landscape highlights why real-world financial analysis, including credit cycle assessment and risk metrics, forms a critical part of advanced finance training. Practical modeling of stress scenarios and credit risk valuation is often stressed in learning financial modeling coursework.
Factory Momentum Slows, PMI Weakens
Indian manufacturing data revealed a moderation in growth momentum at the close of 2025. Though still above the expansionary threshold, manufacturing activity slowed to its weakest in two years, with subdued new orders and hiring stagnation noted in December.
For macro analysts and equity strategists alike, manufacturing indicators are early signals of demand conditions. These trends feed into everything from GDP forecasts to sector rotation strategies, underscoring the necessity of robust data interpretation and modeling capabilities.
Global Finance: Megadeals and M&A Shape Capital Markets
Historic Year for Global Mergers and Acquisitions
One of the most striking global finance stories was the explosive growth in mergers and acquisitions in 2025. Total global deal-making soared to approximately $4.5 trillion, marking the second-best year on record.
What made the year exceptional wasn’t just volume, but the sheer scale of mega-deals, with a record 68 transactions valued at $10 billion or more. These megadeals spanned industries from entertainment to transport and energy, shaping corporate strategy and competitive positioning worldwide.
Such activity has direct benefits for investment banks, driving fee pools and advisory work. Understanding these trends is vital for professionals aiming to break into corporate finance, mergers advisory, or strategic investing, and is a key motivator for many students pursuing an investment banking course.
Sector Impacts: Tech, Infrastructure, and Strategic Assets
The surge in M&A was not evenly spread. Tech-focused megadeals, especially in AI infrastructure and data networks, reflected broader themes of strategic concentration and future capabilities. In many cases, acquirers are buying not just assets, but long-term access to capabilities that position them for leadership in the next economic cycle.
For finance professionals, dissecting deal rationales, and the models that justify them, reinforces why skills in valuation, corporate finance modeling, and strategic analysis are so highly prized.
Investment Banking Fees and Advisory Growth
As global deal-making roared back, investment banks enjoyed expanded advisory earnings. Total fees linked to M&A surged, a testament to continued confidence in corporate consolidation and strategic repositioning.
This reinforces a broader industry lesson: periods of market volatility and strategic reassessment often coincide with high demand for advisory services. Whether in buy-side strategy or sell-side structuring, financial modeling proficiency is indispensable, making topics such as discounted cash flow, accretion/dilution modeling, and leveraged buyouts core to practical analysis.
Emerging Themes and What to Watch in Early 2026
Beyond specific headlines, several financial themes emerged that will shape 2026’s economic narrative:
1. Ongoing Cost of Capital and Monetary Policy Shifts
Global central banks remain at the heart of asset pricing and investment flows. While 2025 saw easing in some regions, debate continues about the pace of normalization, inflation targets, and the interplay of monetary policy with risk assets. This dynamic feeds directly into discount rates used in financial modelling, a cornerstone of valuation analysis.
2. Currency Volatility and External Balances
India demonstrates how currency shifts can ripple through equity flows, import costs, and exporter profitability. Analysts globally will continue to watch emerging market currencies as indicators of capital allocation and sentiment. Advanced modeling frameworks build these real-world dynamics into forward forecasts.
3. Technology and Capital Deployment
Deals driven by AI, data infrastructure, and next-generation tech signal how capital is being deployed beyond traditional sectors. Finance professionals must evolve with these trends, integrating sector insight with quantitative rigor.
Conclusion: Finance in Motion as the New Year Begins
The transition from 2025 to 2026 was more than a date change, it reflected evolving narratives in currency markets, capital flows, corporate strategy, and global dealmaking. From the rupee’s volatility and FII movements in India to the dazzling global M&A boom, these stories demonstrate how finance remains at the heart of economic change.
For students and aspiring professionals, mastering financial analysis and modeling skills is more than academic. It enables participation in these global dynamics with confidence, whether evaluating a merger, assessing currency risk, or building valuation models that inform strategic decisions.
As markets and policies continue to evolve, the finance community will remain engaged, adaptive, and analytical, ready to turn data into insight for the year ahead.
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