Equity Fell 2.1% as Investors Shifted Towards Safety in August: Vallum Capital
According to Vallum Capital’s Monthly Macro Grid Chartbook for Sep 2026, the domestic market turned distinctly risk-off, with equity falling 2.1% in August, while money market assets were the only major asset class to deliver a positive monthly return at +0.5%. Commodities declined 0.5% during the month but remained the strongest performer on a year-to-date basis, returning +12.0%, nearly nine times equity’s +1.4% YTD return. Fixed income was flat for the month and delivered a +3.7% YTD return
The shift towards safety was also visible in fund flows. Equity fund inflows fell from Rs 45,325 Cr in July to Rs 31,326 Cr in August, a decline of nearly Rs 14,000 Cr in a single month. Money market inflows also moderated sharply from Rs 1,46,677 Cr to Rs 43,407 Cr, while fixed income moved from Rs 6,212 Cr of inflows in July to Rs 1,468 Cr of outflows in August. Commodities, however, saw inflows rise from Rs 4,081 Cr to Rs 4,800 Cr, suggesting that investors continued to seek exposure to the commodity theme despite its marginal monthly decline.
Within equities, the pressure was broad-based, but some pockets continued to hold up. Only IPO and Defence remained in positive territory among the 23 themes, returning +2.2% and +1.4%, respectively. At the other end, Auto and Railways were the biggest laggards, falling 6.5% and 6.4%, while Technology declined 6.1%. The divergence within sectors was particularly sharp: Internet & Digital gained 3.2%, while the IT Index fell 9.1%, pointing to a significant difference in how investors are positioning within technology rather than a broad sector-wide move.
The market also showed a clear preference for smaller companies. Micro-Cap gained 2.6% while Small-Cap was marginally positive, even as Large-Cap fell 4.1%. This suggests that the weakness was not uniform across market capitalisation and that selectivity remained important.
The broader regime therefore remains one of domestic equity pressure, selective strength in smaller companies and momentum-led pockets, while traditional defensive labels have struggled. Globally, commodities and Latin American markets stood out, with Brazil gaining 9.9% and Global-Commodity rising 8.8%, while Korean ETFs saw some of the sharpest declines. For Indian investors, the message from August was clear: capital was becoming more selective, with safety, commodities and specific pockets of the market attracting greater attention even as broad equity remained under pressure.
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