Indian equity benchmarks opened higher on Monday as oil prices fell after US-Iran pause strikes. At the open, Sensex climbed 580 points while Nifty was up 170 points. At the close, Sensex was up 776 points while Nifty gained 228 points.

Meanwhile, the rupee opened 44 paise stronger at 96.13 against the US Dollar, compared to Friday’s close of 96.57 a dollar.

Macro re-anchoring defined H1 2026. The old anchors the central-bank backstop, the consumer engine, multiple expansion are giving way to a disciplined Fed, the AI capex cycle and earnings-driven returns. When pricing shifts from liquidity back to fundamentals, that moment tends to lay the foundation of the next market advance.

The Fed made its biggest shift since Volcker. Market pricing flipped from easing to tightening the implied spread moved from 230bp in August 2024 to about +33bp, with 80% odds of a hike by December. Chair Warsh dismantled the “Fed put,” yet equities got cheaper. We read current pricing as too hawkish.

Growth now runs on a single variable: AI. Roughly 40% of Q1 GDP growth came directly from AI hardware investment the first time it exceeded the consumer’s contribution since 2009. But the buildout is turning from a deflation story into an inflation driver, making AI capex one of H2’s key tail risks.

U.S. equities made new highs while getting cheaper. The S&P 500 rose 18.5% over twelve months with none of it from multiple expansion: forward P/E compressed from 22x to 20x while forward EPS jumped 30%. This is the mirror image of 2021’s multiple-led top an earnings-driven advance.