New Delhi: Domestic equity markets rose on Wednesday, buoyed by strong macroeconomic indicators as India’s economy expanded 7.8 per cent year-on-year (YoY) in Q1 FY26, marking the fastest growth in five quarters.

The Services Purchasing Managers’ Index (PMI) surged to 62.9 in August 2025, its highest level in over 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, 28 per cent) into a two-rate structure of 5 per cent and 18 per cent -- and proposed a special 40 per cent slab for select luxury items such as high-end cars, tobacco, and cigarettes.” ICRA Analytics said in its report.

Equity markets also drew support after the US Federal Reserve delivered its first rate cut of the year in September, citing recent weakness in the labour market. However, overall gains were limited amid lingering uncertainty over India-US trade negotiations and continued foreign institutional investor outflows from domestic equities.

The report also highlighted trends in mutual fund performance. In the equity segment (as of September), all categories delivered positive average returns over 3-, 5-, and 10-year periods. Small-cap funds recorded the highest average returns over 5- and 10-year periods, while large-cap funds posted a negative average return of around 4.92 per cent over one year.

In the debt mutual fund segment, credit risk funds provided the highest average returns over six-month, 1-, 3-, and 5-year periods, while low-duration funds offered the highest return over one month at 18.57 per cent. Overall, all categories of debt funds reported positive returns across 1-, 3-, 5-, and 10-year periods.

IANS