When the Holiday Glow Fades: The Uninvited Drama of 2026

Dear Insighter,

So here we are, emerging from that strange temporal spa between Christmas and New Year’s—the universally acknowledged week of pyjamas, leftover plum cake, and vows to check emails only in the event of an actual fire. We shared memes about “see you next year,” convinced ourselves the world had politely agreed to press pause, and leaned into a collective, blissful delusion.

And then reality kicked in.

Not even three days into 2026, and the headlines were already shouting about military strikes, a captured president, and an oil-rich nation being rearranged like pieces on a geopolitical chessboard. It felt less like a new year and more like we’d stumbled into the final, over-written season of a long-running sci-fi series.

Nicolas Maduro being taken into US custody, wrapped in the language of democratic transition but smelling unmistakably of petroleum, landed with all the subtlety of a Monday morning alarm. Donald Trump’s comments about American oil companies “fixing” Venezuela’s infrastructure completed the picture. Reading through it all, it was hard not to think of Frank Herbert’s Dune, where entire civilisations rise and fall over a single, universe-shifting resource.

Swap spice for oil and the parallels are uncomfortable: a resource-rich land, a population in turmoil, and great powers manoeuvring less for people than for what lies beneath their feet. The framing of the operation as a rescue mission for a “stolen” resource only sharpens the irony. Some of our most popular stories aren’t really about freedom or villains. They’re about pipelines and profit.

Anyway, we see such narrative versus substance play out everywhere, including our markets. As Michael Debabrata Patra observes, Indian equities are behaving like a gifted student who’s decided to sleep through the exam. On paper, the fundamentals are enviable: an 8% growth trajectory, inflation fading, a manageable current account deficit, and corporate balance sheets in better shape than they’ve been in years. And yet, the markets sulk.

In dollar terms, India has badly underperformed its emerging market peers. Foreign investors have pulled billions, rotating into tech-heavy Asian markets chasing the AI story. The rupee has weakened. Forward valuations have cooled. It’s not that India’s story is broken, but global capital seems to be reading a different book entirely, one filled with chips, models, and promises of instant transformation.

The optimistic view is that when the AI trade deflates—or at least sobers up—India’s relatively grounded growth story will look attractive again. The less comforting possibility is that solid fundamentals are no longer enough in a world addicted to spectacle.

Then, look at our IPO market. As DV Ramana notes, the “offer for sale” has quietly taken centre stage. Over the past decade, a growing share of IPO proceeds has gone not into building businesses, but into providing exits for early investors. The Chief Economic Advisor has called this out bluntly. It marks a shift from caveat emptor to caveat venditor—a subtle but important realignment of responsibility.

When public markets become exit lounges rather than engines of capital formation, something fundamental is lost.

The morning after this IPO party is visible in the small-cap space. Manoj Rane warns: hundreds of small and mid-sized stocks are trading at deep discounts to their peaks even as headline indices remain near record highs. It’s a tale of two markets, and a reminder that speculation, however fashionable, is not a strategy. Real wealth, boring as it sounds, is built through discipline, patience, and professional management.

Meanwhile, the cigarette industry is having its own dramatic moment. As Krishnadevan V notes, Parliament has passed the Central Excise Amendment Act, 2025, sharply raising duties on cigarettes from ₹200–₹735 per 1,000 sticks to roughly ₹2,700–₹11,000. The Tobacco Institute warns of hardship for 40 million farmers and retailers, and raises the familiar spectre of smuggling. Because apparently, every tax increase on a deadly product is just one step away from enabling organised crime. It's a peculiar business model, profiting from addiction while protesting every attempt to price in the externalities.

Regulators, to their credit, seem to be leaning into this reality. One of the more elegant recent interventions comes from SEBI’s overhaul of the Basic Services Demat Account framework, writes Krishnadevan. By making low-cost accounts the norm and requiring investors to actively opt in to more expensive options, SEBI is quietly using behavioural economics for good.

This idea that regulation must move from rule-making to system architecture is central to Anupam Sonal’s argument for a no-pause financial framework. In an economy defined by speed, interconnected risks, and digital feedback loops, regulators can’t afford to govern by rear-view mirror.

And yet, for all this progress, a stubborn flaw remains: credit. As R Gurumurthy argues with clarity, SME financing in India is trapped in an impossible contradiction. Banks are expected to lend politically but price risk commercially. Credit becomes a moral obligation, caution is treated as failure, and discipline is selectively suspended.

The result is a system heavy on schemes but light on accountability. The fix, as BL Chandak suggests, isn’t another guarantee or directive—it’s plumbing. Linking invoices to payments would illuminate the dark matter of trade credit, turning real cash flows into usable credit signals. It’s a structural solution to a structural problem: build transparency into the system, and trust follows.

Trade policy tells a similar story of resilience meeting delay. Indian exporters endured a bruising 2025, navigating tariffs, supply chain disruptions, and regulatory uncertainty with remarkable grit. Policy support did arrive, but often late. As Sharmila Kantha and Vijay Chauhan note, resilience alone isn’t a strategy. In a world where protectionism is back in fashion, speed matters as much as intent.

Gurumurthy’s critique of currency depreciation as a growth strategy is timely. In today’s import-intensive manufacturing and skill-driven services economy, a weaker rupee often raises costs faster than it boosts competitiveness. What once worked has quietly become a macroeconomic risk.

Zoom out further and the global trade mess begins to look like an echo chamber. As TK Arun brilliantly traces, much of today’s tariff obsession is rooted in grievances forged decades ago, during Japan’s rise and the era of the yen carry trade. We’re still living with the aftershocks of an old argument about who gains, who loses, and who gets blamed.

Back home, the digital battles are quieter but no less consequential. India’s decision to reserve the upper 6 GHz spectrum band for licensed telecom operators, rather than give it away to Big Tech for unlicensed use, is a clear statement of intent. Infrastructure, not platforms, will anchor digital sovereignty.

Corporate India is making its own wagers. Coforge’s large, stock-funded acquisition of Encora is being sold as a leap into AI-led engineering. The narrative is compelling; the timing invites scrutiny. When a company pivots to generative AI midway through the hype cycle, investors are entitled to ask whether they’re buying capability or conviction.

Sharmila Chavaly’s examination of flag carriers through the lens of Japan Airlines’ reboot offers a simple truth: the state can save a company, but only by abandoning sentimentality. It must either be a ruthless disciplinarian or a passive shareholder. The halfway house has failed everywhere.

Hemachandra Padhan points to a different, more hopeful frontier: tribal women entrepreneurs. By formalising what already exists—work, trade, resilience—India could unlock one of the most powerful levers of inclusive growth by 2047. Success here won’t announce itself with unicorn headlines. It will show up as fewer distress migrations, steadier incomes, and quieter dignity.

And finally, there’s our neighbourhood. Bangladesh’s elections, unfolding amid grief, realignment, and rising uncertainty, are being watched closely in Delhi. With familiar players weakened and uncomfortable alliances emerging, the region’s fragile balance is once again in play.

So here we are, barely a fortnight into 2026. The holiday stillness is gone, replaced by familiar chaos. Perhaps that’s the lesson: there is no pause button. The world doesn’t wait for us to finish our leftovers.

The year has made its intentions clear. Expect drama. Look past the spin. And stay alert to the quiet shifts that matter most.

Until next time. Can we skip to the good part already?

Phynix

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