The Month that was : June 2025

Indian equity markets extended their winning streak for the fourth consecutive month in June, with the Nifty50 Index posting a gain of 3.1%. Broader markets continued to do well, as mid-cap and small-cap indices rose by 4.0% and 6.7%, respectively, on the back of positive global cues. Sectoral performance was broadly positive, with nearly all sectors ending in the green, except FMCG. IT, healthcare and real estate were notable performers. Asian indices such as South Korea and Japan registered strong gains of 13.9% and 6.6%, respectively, while the US S&P 500 rose 4.6%. 

Sentiment was uplifted globally by declining crude oil prices and easing of geopolitical tensions, especially following a ceasefire agreement between Iran and Israel.
Back home, RBI Monetary Policy Committee (MPC) surprised markets by cutting the repo rate by 50bps to 5.5%, citing easing inflation and a need to support growth. Additionally, the CRR was reduced by 100bps, to be implemented in four tranches between September and November, aimed at improving systemic liquidity. 
India's macroeconomic data reflected a moderation in price pressures, with CPI inflation easing to 2.8% in May from 3.2% in April. IIP growth fell to 1.2% from 2.7% in the prior month.
FIIs were net buyers in the secondary market, purchasing around USD 1.9 billion worth of equities,  while DIIs remained buyers of USD 8.5 billion during the month.

Market Outlook

The surprise rate cut and measures to ease funding scenario for key sectors are expected to enhance credit transmission and consumption.
As global volatility continues to reduce, India's relative economic stability and improving inflation trajectory position it as an attractive investment destination. Barring intermittent volatility on the back of Trump's tariff measures, Indian markets should do well on the back of stable macro economic parameters and improving rural consumption.
Going forward, investor focus will remain on the upcoming earnings season, monsoon progress, and clarity on USA's tariff stance. A portfolio approach favouring domestic consumption oriented sectors such as Consumer Discretionary, FMCG, real estate should offer favourable risk-reward in the current landscape.

Happy Investing!