Bull- e-tin

Equity Market Outlook
Indian equities remained resilient in June 2026 as easing geopolitical tensions, moderating crude prices and supportive corporate fundamentals improved market sentiment. The Nifty 50 gained 1.4% during the month, while broader markets outperformed, with the Nifty Smallcap 250 and Nifty Microcap 250 advancing 4.3% and 6.4%, respectively, reflecting sustained domestic risk appetite.

Following the de-escalation of tensions between the US and Iran, crude prices corrected sharply from intra-month highs near $97/bbl to around $70/bbl by month-end, easing concerns around inflation and India's current account deficit and shifting investor focus back toward growth and corporate fundamentals. India VIX also declined to 13.6 by June-end after peaking at 27.9 in March, indicating a normalization of risk perception and improving market sentiment.

On the valuation front, the Nifty currently trades at around 20.6x earnings, below its 10-year average of 24.6x, suggesting valuations remain relatively comfortable despite the recent recovery. The initial set of FY27 corporate results also reflects healthy earnings momentum, with companies reporting 10.8% YoY revenue growth and 20.3% YoY net profit growth. Notably, the Nifty 50 has delivered an EPS CAGR of ~16% between FY21 and FY26, highlighting the strength and consistency of corporate earnings . Overall, easing energy prices, moderating volatility, resilient earnings growth and reasonable valuations continue to support a constructive medium-term outlook for Indian equities.

Debt Market Outlook
India's debt market remained relatively stable through June 2026, with yields easing across the curve as geopolitical tensions subsided and crude prices corrected sharply. The 10-year G-Sec yield softened to 6.75% from 7.00% in May, while the 5-year yield eased to 6.42% from 6.83%, reflecting improved domestic risk sentiment. The yield curve, however, remains upward sloping, indicating that markets continue to price in term premium.

Domestic macro indicators remained broadly supportive, although inflationary pressures warrant monitoring. CPI increased to 3.93%, while WPI rose to 9.68%. At the same time, bank credit growth accelerated to ~18.0%, significantly ahead of ~12.0% deposit growth, keeping liquidity conditions relatively tight and limiting the scope for a sharp decline in yields.

Globally, policy rates remain elevated, with the US Federal Reserve expected to remain cautious on rate cuts amid persistent inflation, keeping global bond yields relatively firm and influencing capital flows, currency movements and domestic interest-rate expectations. Meanwhile, the European Central Bank raised its policy rate from 2.15% to 2.40%, citing resilient economic activity and inflation risks, while the Bank of Japan increased its policy rate from 0.75% to 1.00% on the back of stronger wage growth and sustained inflation. At its June MPC meeting, the RBI maintained the repo rate at 5.25% and retained a neutral stance, signalling a balanced approach as it monitors inflation, liquidity and evolving global developments.

Overall, the current environment continues to favour accrual and hold-to-maturity strategies, as yields remain attractive while the scope for meaningful capital gains from duration appears limited until there is greater clarity on the global rate cycle, inflation trajectory and RBI policy direction.

June

India's Earnings Resilience Meets a Shifting Global Capital Cycle

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Equity Market Outlook
Indian equities remained volatile through May 2026, with performance diverging across market-cap segments. While the Nifty 50 declined 1.9% during the month, the broader markets remained relatively resilient, with the Nifty Next 50 (+2.1%), Mid Cap 150 (+2.6%), Small Cap 250 (+1.6%) and Micro Cap 250 (+3.0%) outperforming.

Q4 FY26 earnings remained healthy, with over 4,100 companies reporting revenue growth of 10.6% and profit growth of 20.3% YoY. Large Caps contributed nearly ₹4.4 lakh crore of the ₹6.1 lakh crore total profits reported, accounting for a significant portion of overall earnings growth. Market sentiment, however, remained influenced by developments in crude oil and geopolitical tensions. While WTI crude corrected sharply from monthly highs above $105/bbl to close near $87/bbl, supply-side uncertainties remain elevated and could continue to influence inflation expectations, corporate margins, and investor sentiment over the coming quarters.

Currency concerns resurfaced during the month as the rupee weakened modestly against the US Dollar. However, India's Real Effective Exchange Rate (REER) remains near 89.7, indicating that the currency continues to trade at relatively undervalued levels despite the recent depreciation and could support medium-term currency stability. Foreign investors remained cautious, with net FII outflows of ₹55,963 crore during May, though significantly lower than April's ₹70,135 crore and March's ₹1.23 lakh crore. At the same time, some profit-booking has emerged in South Korea and Taiwan following strong AI-led rallies, with a similar trend potentially extending to expensive AI-driven segments in the US market. Against this backdrop, India remains one of the relatively fairly valued large economies. It could benefit from any rotation in global capital flows, supported by its growing investments in energy, manufacturing and data-centre infrastructure required for an AI-driven world.

Overall, while volatility may persist amid geopolitical and commodity-related uncertainties, earnings resilience, supportive domestic flows and more reasonable valuations continue to support the medium-term outlook for Indian equities.

Debt Market Outlook
India's debt market remained relatively stable through May 2026, though yields continued to reflect evolving inflation expectations and geopolitical uncertainties. The 10-year G-Sec remained elevated near 7.00%, while yields across the curve remained firm despite stable policy rates. At the shorter end, liquidity conditions remained comfortable, with the call rate at 5.36% and money market rates broadly stable. Bank credit growth improved to 16.5%, while deposit growth moderated to 12.4%, keeping the credit-deposit ratio near 82% and indicating continued demand for funding within the system.

Inflation remained within the RBI's comfort range, with CPI at 3.48%; however, the sharp rise in WPI inflation to 8.30% suggests that producer-level cost pressures are beginning to build. Coupled with ongoing geopolitical tensions and volatile crude prices, this may warrant caution from the RBI despite the benign headline inflation backdrop. With the June MPC meeting approaching, the central bank is likely to maintain a wait-and-watch approach, balancing supportive growth conditions against the risk of imported inflation and supply-side pressures.

Globally, interest rates remain elevated, with the US at 3.75%, the UK at 3.75%, the Euro Area at 2.15%, and Japan at 0.75%, limiting the scope for sharp domestic rate cuts. While crude oil corrected from monthly highs above $105/bbl to near $87/bbl by month-end, supply-side risks remain elevated and could quickly reintroduce inflationary pressures if geopolitical tensions escalate.

Given the current backdrop, yields are likely to remain relatively firm with limited visibility on policy easing. In such an environment, accrual and hold-to-maturity (HTM) strategies appear better positioned than duration-led approaches, as the opportunity for meaningful capital gains remains limited while income visibility continues to remain attractive.

MAY

Indian Markets Recover as Crude Risks Moderate

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Given the current market dynamics and economic fundamentals, portfolio diversification with a focus on long-term growth opportunities will be the key to achieving sustained investment success. Investors should consider diversifying across sectors and asset classes to mitigate riskand capture growth potential. It is critical for investors to ensure a proper portfolio allocationand follow a systematic approach to equities. A staggered buy-on-dips approach might be theright strategy from a near to medium-term perspective till things play out, as outlined above.

Given the current outlook, investors should consider medium to long-duration funds to capitalize on potential capital appreciation as rate cuts commence. These funds will benefit from the declining yield environment, providing higher returns as bond prices rise.

Equity Market Outlook
Indian equity markets rebounded sharply in April 2026 after the March correction, with Nifty 50 up 7.5%, Midcaps up 13.6% and Nifty Smallcap 250 up 17.10%, reflecting a broad-based recovery. Market breadth improved significantly, with ~87% of stocks closing positive, indicating strong participation across segments. Sectorally, the rally was led by Realty (21.9%), Metals (15.2%), and FMCG (12%), while IT (1%) lagged, reflecting global demand uncertainty and rotation toward domestic themes. From a valuation perspective, the Nifty is currently trading at 20.9x P/E, approximately 7% below its long-term median of ~22.5x, reflecting a moderation in premium following the recent correction and bringing valuations closer to more comfortable levels.

The recovery was supported by easing macro pressures. Crude prices, which had spiked to ~$114/bbl (Apr 6), corrected to ~$87 (Apr 17) and stabilised, reducing concerns around inflation and the current account deficit. At the same time, RBI kept the repo rate unchanged at 5.25% with a neutral stance, while projecting FY27 GDP growth at 6.9%, indicating confidence in domestic growth despite global uncertainties.

Volatility moderated during the month, with India VIX cooling to 18.5 from 27.9 in March, though still above its ~14 average, suggesting risk perception remains elevated but stabilising. Domestic institutional flows remained supportive, helping absorb volatility and stabilise broader market sentiment.

Despite the recovery, markets remain sensitive to external risks. Any escalation in West Asia, particularly around the Strait of Hormuz, could disrupt crude supply and reintroduce pressure on inflation, currency, and flows.

Near term, focus shifts to the Q4 FY26 earnings season, which will be key in assessing the impact of the March crude spike on margins and demand trends. Management commentary will provide clarity on cost pressures and FY27 outlook, especially for energy-sensitive sectors.

Overall, while volatility may persist, the underlying setup remains constructive. Improving breadth, stable policy signals, and more reasonable valuations support the medium-term outlook, with a staggered allocation approach remaining appropriate.

Debt Market Outlook
India’s debt market saw yields move higher through April 2026, reflecting evolving macro expectations and global rate dynamics, with the 10-year G-Sec rising to 7.02% from 6.96% in March, while the 3–7 year segment also firmed up (3Y 6.46%, 5Y 6.74%), indicating a steady rebuild in term premium. At the shorter end, liquidity conditions improved, with the call rate easing to 5.16% from 6.90%, while 3-month CP remained stable near 5.26%, reflecting better funding conditions.

In the April 8 MPC review, RBI kept the repo rate unchanged at 5.25% and maintained a neutral stance, highlighting geopolitical risks and supply-side pressures. The RBI projected FY27 GDP growth at ~6.9% and CPI inflation at ~4.6%, indicating a stable macro outlook but limited urgency for policy easing.

Globally, interest rates remain elevated, with the US at 3.75%, UK 3.75%, Euro Area 2.15%, and Japan 0.75%, keeping external yield pressures intact and limiting room for sharp domestic rate cuts.

However, external risks remain elevated, particularly from geopolitical tensions, with crude prices remaining volatile in the ~$87–$114/bbl range during the month. A sustained rise in energy prices could widen the current account deficit, pressure the currency, and increase imported inflation, along with raising costs of petroleum-linked inputs and other critical imports.

In this environment, duration-led strategies may face challenges, as yields are likely to remain firm with a slight upward bias and limited scope for capital gains. With no clear expectation of rate cuts and recent firming in mid-segment yields, the current yield environment in the 3–7 year segment appears more aligned with accrual visibility and a hold-to-maturity approach, while long-duration positioning may remain sensitive to further yield movements.

apr

Crude Above $100, India's Macro Anchors Hold

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Equity Market Outlook
Indian equity markets enter April 2026 in a phase of geopolitical repricing rather than a fundamental breakdown. March proved to be a challenging month, with the Nifty 50 correcting ~10%, primarily driven by the escalation of the West Asia conflict. The sharp spike in Brent crude prices above $100 per barrel raised concerns around inflation and the current account deficit, while triggering significant FII outflows of over ₹29,700 crore within a week. The combination of geopolitical uncertainty, rising energy prices, and cautious global cues weighed on sentiment, leading to broad-based declines across sectors. Financials, energy, and consumption stocks bore the brunt of the sell-off, while relatively defensive sectors such as healthcare and power remained resilient.

The correction was further accentuated by a weakening rupee and persistent global uncertainty around US inflation and policy direction. However, despite these near-term pressures, India's structural growth story remains intact. The recent drawdown has, in fact, helped bring valuations back to more reasonable levels, particularly in the broader markets where the premium over large caps has moderated meaningfully.

From a near-term perspective, markets appear to be adjusting to a "higher crude" regime. Elevated energy prices could exert pressure on inflation, corporate margins, and interest rates, thereby capping upside in the short term. That said, strong domestic institutional flows, policy stability, and resilient macro fundamentals continue to provide a cushion.

Looking ahead, geopolitical developments in the Middle East remain the key swing factor for April. Any signs of de-escalation, particularly on the Iran front, could trigger a sharp relief rally, especially in oversold sectors such as banking and energy. In addition, markets will closely track the RBI's policy decision—where a status quo on rates is widely expected—and the Q4 FY26 earnings season. Management commentary on demand trends, margin outlook, and FY27 guidance will be critical in shaping market direction. A weaker rupee may support export-oriented sectors, while domestic demand will remain sensitive to inflation dynamics. Over the medium to long term, the outlook for Indian equities remains constructive. Strong macro fundamentals, improving corporate balance sheets, a nascent private capex cycle, and favourable demographics continue to underpin growth.

Overall, while volatility is likely to persist in the near term, such corrections have historically provided favourable entry points for long-term investors. A disciplined approach remains key—investors should focus on fundamentally strong businesses, maintain diversification across market caps, and follow a structured asset allocation strategy. Continuing SIPs and deploying capital in a staggered manner during market corrections is advisable, rather than making abrupt allocation decisions in response to short-term market movements.

Debt Market Outlook
India's debt market saw yields rise through March 2026, reflecting robust domestic macro indicators and rising global uncertainty. CPI inflation increased to ~3.21%, while WPI rose to ~2.13%, indicating continued normalization in price pressures but remaining within the RBI's comfort band. Banking system conditions remained supportive, with credit growth around ~15.5% YoY and deposit growth near ~12.2%, ensuring adequate absorption capacity for government borrowing. Bond yields moved higher across the curve, with the 10-year G-Sec rising to ~6.96% from ~6.66% in February, reflecting tighter liquidity and higher term premium.

Looking ahead, the RBI is expected to keep the repo rate unchanged at 5.25% in the upcoming April policy review, as inflation remains within the tolerance band and growth indicators remain resilient. Domestic macro indicators also remain supportive, with GST collections touching ₹2 lakh crore in March, the first time crossing this level since GST rate rationalization last year, signalling strong consumption momentum.

However, if the US-Israel-Iran conflict persists and crude or natural gas prices remain elevated, supply disruptions across key Middle Eastern commodities could widen India's current account deficit, put pressure on the rupee, and increase imported inflation. Rising energy prices can also push up the cost of petroleum-linked inputs and other raw materials. At the same time, disruptions in critical commodities such as helium used in semiconductor and industrial applications could further add to import costs. If such pressures persist, the RBI may need to reassess its policy stance in the coming quarters, particularly if inflation expectations begin to rise.

Overall, the environment continues to favour short-to-medium duration positioning in the 3–5 year segment, balancing carry with controlled volatility while monitoring global commodity risks.

Mar

Oil, Geopolitical Risk, and India's Structural Resilience

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Equity Market Outlook
Indian equities entered March 2026 in a phase of consolidation following a volatile start to the year. While India's structural growth story remains intact, near-term upside appears capped amid a mix of global and domestic uncertainties. February saw markets reacting to both domestic policy developments and global trade dynamics. The Union Budget struck a balanced and pragmatic tone, outlining a roadmap for growth over the coming decade and reinforcing confidence in India's medium-term economic trajectory. However, global developments around tariffs and trade flows created intermittent risk-off sentiment across emerging markets, contributing to bouts of volatility in domestic equities.

Globally, markets were influenced by developments surrounding the evolving US tariff regime. The rollback of punitive tariffs as part of the interim US-India trade framework initially supported sentiment, but subsequent legal and policy developments created uncertainty around global trade flows. In a key development, the US Supreme Court ruled that the President does not have the authority to impose broad tariffs, following which Trump announced a temporary global tariff of around 15% was introduced for a limited period. While the final outcome remains uncertain, a lower-than-expected tariff level could improve the competitiveness of Indian exports and support export-oriented sectors.

Technology stocks also came under pressure as rapid advances in artificial intelligence raised concerns around business model disruption. Fast-paced innovation led by companies such as OpenAI and Anthropic has sparked debates around automation and the potential cannibalization of traditional IT and R&D services. The launch of advanced "agentic" AI tools capable of automating complex multi-functional tasks has intensified concerns about margin compression and structural shifts in IT services, BPO, and other technology-driven sectors.

Despite these uncertainties, India's macroeconomic backdrop remains relatively stable. Expectations of around 10% nominal GDP growth, improving domestic demand and a gradual pickup in exports supported by trade agreements with key partners underpin the medium-term outlook. High-frequency indicators are beginning to show early signs of stabilization, while strong foreign exchange reserves of over USD 700 billion and fiscal discipline continue to provide a strong macro anchor.

That said, external risks remain elevated. Escalating geopolitical tensions in the Middle East could push crude oil prices higher, with implications for inflation, growth and corporate margins. Global interest rates are also likely to remain structurally higher over the long term despite recent rate cuts in some economies, which could influence the cost of capital for businesses globally.

Against this backdrop, markets are likely to remain range-bound in the near term, leading to a phase of time-correction rather than sharp price moves. At the same time, the ongoing correction is helping the market shed excesses built up over the past few years, gradually improving the risk-reward profile in high-quality growth businesses. While geopolitical risks may prove transitory, structural changes driven by artificial intelligence could require companies to adapt rapidly. Investors should therefore look beyond short-term volatility and focus on businesses with strong fundamentals and self-sustaining growth drivers aligned with India's long-term economic trajectory.

Debt Market Outlook
India's debt market remained largely stable through February 2026, supported by moderate inflation, comfortable liquidity, and steady policy expectations. CPI inflation rose to ~2.75%, while WPI increased to ~1.8%, indicating gradual normalization in price pressures. Banking system conditions remained supportive, with credit growth around 14% YoY and deposit growth near 11.5%, ensuring adequate absorption capacity for government borrowing. Bond yields eased marginally across most tenors, with the 10-year G-Sec moderating to ~6.66% from ~6.70% in January, reflecting stable demand for sovereign bonds.

The RBI maintained the repo rate at 5.25% and continued its neutral stance, signalling a preference for policy stability after the 2025 easing cycle. In its commentary, the RBI highlighted strong growth momentum in Q3 FY26, while noting that inflation remains within the tolerance band, reducing the urgency for immediate further rate cuts. Domestic macro indicators remain supportive, with resilient credit growth and fiscal discipline helping anchor investor confidence and keeping yields broadly range-bound.

Key Risk: The US-Israel–Iran conflict, which began on February 28, introduces uncertainty into global energy markets. As West Asia remains a major crude-exporting region, any prolonged disruption could push oil prices higher. A sustained rise in crude oil prices may impact the INR and imported inflation, potentially elevating bond yields and influencing the RBI's policy stance in the coming quarters.

Overall, the backdrop continues to favour short-to-medium duration positioning in the 3–7 year segment, balancing carry with controlled volatility while monitoring global commodity risks.

Feb

$24Tn Market Opportunity & the Foundation for long-term growth

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Equity Market Outlook
Indian equities witnessed a volatile start to 2026, with January marked by global risk-off sentiment, geopolitical tensions and uncertainty around trade and tariff policies. India's equity market underperformed most global peers, largely due to heavy FII outflows and the surprise increase in Securities Transaction Tax (STT) on derivatives during the Union Budget week, which amplified volatility. Despite this, domestic macro fundamentals remained stable. The correction, particularly in mid- and small-cap stocks, has helped moderate valuations and improve the broader market's risk-reward profile.

The earnings environment, however, remains supportive. Early Q3 FY26 results across Nifty 500 companies indicate improving earnings breadth, with sectors such as financials, autos, capital goods, IT services, and select consumption segments expected to deliver healthy double-digit earnings growth. With the Nifty trading at around 20x forward earnings and consensus EPS growth estimated at 12–14% over the next 12–18 months, valuations now appear more reasonable and aligned with India's structural growth outlook. Continued strong domestic inflows through SIPs and institutional participation are also expected to provide stability to the markets.

The Union Budget further reinforces India's medium-term growth trajectory through its sustained focus on capital expenditure and infrastructure-led development. Increased allocations toward railways, roads, urban infrastructure and Tier-2/3 city development highlight the government's commitment to long-term growth. Additional emphasis on defence spending, semiconductor and electronics manufacturing, along with favourable policies for data centres and digital infrastructure, supports emerging growth sectors while also aiding domestic manufacturing and consumption. India's strong growth outlook, improving private capex cycle and resilient domestic consumption trends are expected to strengthen domestic market drivers over time.

Overall, while short-term volatility may persist due to global uncertainties, improving earnings momentum, reasonable valuations and strong domestic liquidity support a constructive medium-term outlook for Indian equities. A bottom-up investment approach focusing on quality businesses with strong balance sheets and sustainable earnings visibility remains key, with selective opportunities emerging in mid and small caps following recent corrections.

Debt Market Outlook
India's debt market remained stable through January, supported by moderate inflation, comfortable liquidity, and steady policy expectations. CPI stood around 1.3%, while WPI turned mildly positive, signalling normalisation without disrupting the disinflationary trend. Banking system conditions stayed supportive, with credit growth at~12.7% YoY and deposit growth at ~10.7%, ensuring adequate absorption capacity for government borrowing. Bond yields edged marginally higher, with the 10-year G-Sec around 6.7%, reflecting cautious positioning ahead of policy and fiscal cues.

At the upcoming policy review, the RBI is expected to keep the repo rate unchanged at 5.25% and maintain a neutral stance, following the December cut. The Union Budget (February 1) reaffirmed fiscal discipline, with the FY27 fiscal deficit targeted at ~4.3% of GDP, even as gross market borrowing rises to ~₹16.9 lakh crore to support growth. Government capex was increased meaningfully, keeping supply pressure elevated in absolute terms, while the Centre reiterated its commitment to lower central government debt/GDP to ~55.6% in FY27, with a medium-term target of ~50±1% by FY31.

Looking ahead, higher borrowing and capex may keep long-end yields mildly sticky, with limited upside pressure given credible fiscal consolidation. For investors, the environment continues to favour short-to-medium duration positioning in the 3–7 year segment, balancing carry with controlled volatility. Overall, India's fixed-income outlook remains constructive, supported by policy continuity, resilient credit growth, and a clear medium-term debt consolidation path.

Jan

Positioning for the Next Phase of India's Market Cycle

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Equity Market Outlook
Indian equity markets enter 2026 with calibrated optimism after weathering a resilient yet consolidating 2025. While headline indices delivered near-10% returns, this masked considerable stress beneath the surface. Almost 69% of listed stocks ended the year in negative territory amid global trade tensions, persistent FII selling and subdued single-digit earnings growth. Encouragingly, strong domestic tailwinds - aggressive RBI rate cuts, resilient retail participation, and macro stability - supported a sharp year-end recovery, bringing the Nifty close to record highs and normalizing forward valuations to a more palatable 20–21x from earlier elevated levels.

As we move into 2026, the market appears to be transitioning from a liquidity-driven phase to an earnings-led cycle; a shift that is critical for sustaining the next leg of the bull market. Earnings growth is expected to revive into the low double digits, supported by improving consumer demand, easing inflation, tax relief measures, and a visible pickup in credit growth. System liquidity remains abundant, while domestic flows are likely to stay steady, continuing to provide structural support to equity markets. At the same time, FII outflows could gradually reverse over the course of the year as relative valuation gaps compress and India's growth differential stabilizes.

The macro environment further strengthens this constructive outlook. Higher government capex and an accommodative monetary stance on the domestic front are being complemented by global tailwinds such as a gradual easing cycle by the US Federal Reserve, benign energy prices and easing India-US trade frictions. Together, these factors position 2026 as a potential inflection year — one where patience built through a challenging period may be rewarded via improved earnings visibility and selective re-rating in quality franchises. Sectorally, leadership is expected to be selective. Financials should benefit from sustained credit growth and improving asset quality; consumption stands to gain from tax-led demand revival; industrials remain a key play on the infrastructure push; healthcare offers defensive growth, while digital-first themes continue to enjoy structural adoption.

While we expect headline index returns in 2026 to be stronger than those recorded in 2025, we continue to believe that performance is likely to be driven by a relatively narrow set of companies. This reinforces the importance of disciplined stock selection and active portfolio management. From a portfolio construction standpoint, investors should prioritise flexi-cap and large-and-mid-cap strategies that provide dynamic exposure across market segments, complemented by multi-asset diversification such as gold to hedge against global uncertainties. Near-term volatility, whether driven by global cues, currency movements, or bouts of profit-taking, should be viewed as an opportunity to accumulate high-quality businesses rather than as a signal of any structural weakening in India's long-term growth narrative. Continuous monitoring of earnings delivery will remain the key to navigating this transition year effectively.

Debt Market Outlook
India's debt market closed CY2025 on a stable footing, supported by benign inflation, adequate liquidity, and clear policy guidance. CPI remained subdued at around 0.7%, while WPI stayed in mild deflation, reinforcing a durable disinflationary trend. Banking system conditions remain healthy, with credit growth near 11% YoY and deposits growing 9–10%, enabling smooth absorption of government bond supply. Bond yields were largely range-bound in December, with the 10-year G-Sec around 6.6%, reflecting a stable carry environment.

‍At its December policyreview, the RBI reduced the repo rate by 25 bps to 5.25%, likely marking thefinal cut in the current easing cycle, while maintaining a neutral stance. TheMPC lowered its FY2026 CPI forecast to 2.0% and raised GDP growth projectionsto 7.3%, signalling confidence in macro stability. The RBI also announceddurable liquidity measures, including G-Sec OMO purchases and a USD/INRbuy-sell swap, to manage seasonal liquidity pressures. Over CY2025, the reporate declined by a cumulative 125 bps, improving policy transmission.
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Looking ahead, further rate cuts appear unlikely unless growth slows materially, as maintaining a reasonable India–US rate differential remains important for INR stability. For investors, the backdrop continues to favour short-to-medium duration positioning in the 3–7 year segment, balancing carry with controlled volatility. Overall, India's fixed-income outlook remains constructive entering 2026, supported by anchored inflation and policy clarity.

Dec

The Goldilocks Moment of Indian Economy

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Equity Market Outlook
Indian equities enter December 2025 on a constructive footing as the Indian economy appears to be in a Goldilocks moment—a rare phase marked by exceptionally low inflation, falling interest rates, and strong GDP growth. With headline CPI near record lows and core inflation firmly anchored, markets widely expect the RBI to deliver a 25-basis-point repo rate cut in early December, extending cumulative easing in the current cycle to 125 bps. Abundant system liquidity, active OMO purchases, and FX operations have already lowered funding costs across the curve, and an additional cut would further reinforce a favourable cost-of-capital backdrop for corporates. Combined with resilient domestic demand and improving economic momentum, this sets a supportive stage for equity performance as the economy transitions into early 2026.

Macro fundamentals remain a powerful anchor for earnings sentiment. India's GDP grew 8.2% in Q2 FY26, surpassing expectations and highlighting the strength of domestic demand, healthier investment activity, and continued resilience in services. Full-year growth projections for FY26 have been revised upward toward 7.3%, while inflation has moderated to multiyear lows, creating an unusually benign backdrop for corporate profitability. This environment is particularly favourable for domestically driven sectors such as financials, autos, housing, capital goods, and consumer-oriented businesses, where lower borrowing costs and stronger credit growth should translate into improved earnings visibility. However, segments of the market that have experienced sharp valuation re-rating may face intermittent consolidation as investors reassess price-to earnings dynamics.

Export-linked sectors—including IT services, specialty manufacturing, and chemicals—are likely to remain more sensitive to external variables such as global growth trends, currency movements, and foreign demand cycles. While a softer rupee may offer tactical benefits to exporters, uncertainties around global economic momentum and geopolitical developments suggest that investors should adopt a selective, bottom-up approach in these areas. Domestic institutional flows remain a reliable source of market stability, though foreign investor participation may stay uneven in the near term.

In the upcoming Monetary Policy meeting, the RBI is expected to reduce the repo rate by extending the current easing cycle and signalling a neutral but growth-friendly stance, as inflation remains exceptionally benign. Headline CPI is near historic lows, while core inflation remains anchored within the target band, creating room for a prolonged low-rate regime so long as disinflation persists. At the same time, growth projections for FY26 have been revised higher, reinforcing expectations of sustained 7%-plus expansion, supported by resilient consumption, improving corporate balance sheets, and stable financial conditions.

Overall, the equity market outlook for December 2025 and early 2026 remains constructively positive yet selective. From a portfolio standpoint, maintaining a strong core allocation to quality large caps in financials, consumption, manufacturing, and infrastructure is prudent, complemented by selective exposure to fundamentally robust midcaps. Periodic volatility—driven by global cues, currency swings, or profit-taking—should be viewed as opportunities to accumulate high-quality businesses rather than indicators of a structural shift in India's long-term growth narrative.

Debt Market Outlook
India's debt market remained steady through November, supported by sharply easing inflation, firm liquidity, and stable policy guidance. CPI moderated further to 0.25%, while WPI remained in deflation at –1.21%, reinforcing a strong disinflationary environment. Banking system liquidity remains resilient, with credit growth at 11.42% YoY and deposits up 10.24% YoY, enabling comfortable government bond absorption. Funding rates softened — call money averaged 5.25% and 3-month CP yields drifted to 5.32% — while the 10-year G-Sec traded in a tight 6.52–6.60% range, reflecting a stable carry bias.

With inflation now well below the RBI's target mid-point and fiscal collections improving through the festive period, the central bank is expected to begin a 25 bps rate-cut cycle in December to support private consumption and revive interest-sensitive sectors. Globally, the US Federal Reserve faces mounting pressure to lower policy rates as US inflation gradually cools towards 3%, which may improve global risk appetite and debt flows into emerging markets. That said, maintaining a modest interest-rate premium over the US remains important to ensure INR-USD stability, implying a measured and calibrated easing path rather than aggressive cuts.

For investors, the backdrop continues to favour short-to-medium duration positioning of 3–7 years in sovereign and high grade corporate bonds, balancing carry pickup with controlled interest-rate volatility. Dynamic duration and short-term funds can help manage liquidity, while credit strategies stand to benefit from healthy balance sheets across India Inc. and currently attractive spreads. Overall, India's fixed-income outlook remains constructive — lower inflation, strong credit momentum, and a likely shift into a rate-easing cycle set up supportive bond returns heading into H1 FY26.

NOV

India Markets Reignite: Consumption Up, Confidence Higher

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Equity Market Outlook
India's equity markets staged a strong rebound in October 2025, with the Nifty 50 and Sensex rising 4.5% each, marking their best monthly performance since March and outperforming most emerging market peers. The rally was supported by a sharp pickup in festive consumption - Diwali sales were estimated at ₹6.05 lakh crore, up 25% year-on-year - alongside policy-driven tailwinds such as GST rate cuts. Discretionary sectors, including autos, consumer durables, and retail, led the market advance, reflecting resilient domestic demand and an improving macro backdrop.

Macroeconomic indicators painted a broadly positive picture. GST collections rose 4.6% YoY to ₹1.96 lakh crore, while the HSBC Manufacturing PMI surged to 59.2, signaling strong industrial momentum. Fitch Ratings revised India's FY26 GDP growth outlook to 6.9%, citing sustained private consumption and stable inflation trends.

After nearly a year of consolidation, market valuations have turned more reasonable, creating an attractive setup for the next phase of growth. Banking, metals, autos, and PSUs led the rally on improving earnings visibility, balance sheet strength, and policy support. In contrast, IT underperformed amid persistent global demand uncertainty. With robust domestic indicators and the prospect of an India–US trade agreement and supportive policy stance, investor sentiment entering November remains optimistic, albeit with some caution around profit booking and election-related volatility.

Looking ahead, Indian equities appear well-positioned for sustainable medium-term growth, supported by 6.3–6.9% GDP expansion, double-digit earnings potential, and bottom-up opportunities in banking, consumption, and infrastructure. These sectors continue to benefit from structural reforms, the manufacturing push, and rising disposable incomes. However, global uncertainties, particularly around energy prices, US interest rates, and geopolitical risks, could contribute to intermittent volatility.

From a portfolio strategy standpoint, maintaining a disciplined and diversified allocation remains key. Flexi-cap and diversified equity funds focusing on domestic consumption, manufacturing, and financial strength are well-placed to navigate volatility and capture long-term growth. Investors with a multi-year horizon can use market corrections as accumulation opportunities, focusing on quality businesses with strong earnings visibility and governance standards to participate effectively in India's evolving growth cycle.

Debt Market Outlook
India's debt market remained stable in October, supported by benign inflation, comfortable liquidity, and steady policy settings. The RBI held rates unchanged but signalled a possible easing in December, while the US Federal Reserve's back-to-back 25 bps cuts boosted global sentiment. Domestically, the central bank intervened in the forex market to manage rupee volatility, even as liquidity conditions tightened slightly. The 10-year G-Sec traded in a narrow 6.52–6.60% range, reflecting a soft-bias carry environment.

Robust festive consumption and higher indirect tax collections improved fiscal sentiment, helping markets absorb government bond supply. Going forward, the focus will remain on the upcoming India–US trade discussions, domestic liquidity measures, and inflation data. While India is nearing the end of its rate-easing cycle, stable inflation and healthy revenues provide the RBI room to cut rates modestly if growth softens.

For investors, short-to-medium duration strategies (3–7 years) in high-quality sovereign and AAA-rated corporate bonds remain preferred. Dynamic and short-duration funds can help manage near-term volatility, while long-end yields may stay capped by firm demand and fiscal supply. Overall, India's fixed-income landscape remains constructive, offering attractive real yields and policy stability heading into FY26.

Oct

Riding Reform, Managing Risk: India’s Macro Story Enters a New Phase

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Equity Market Outlook
India’s economy remained resilient in the first half of FY 2025-26, supported by sustained investment momentum and healthy government spending. Inflation stayed below projections, aided by favourable food prices and the recent GST 2.0 reforms that simplified taxes and lowered consumer prices. The RBI maintained the repo rate at 5.50% with a neutral stance, reflecting a balanced approach toward supporting growth while preserving financial stability. With an upward revision of GDP growth to 6.8%, and strong consumer sentiment in both urban and rural areas, India continues to stand out as a top performer among major economies despite external headwinds.
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In September, equity markets moved in a tight range, reflecting a tug-of-war between supportive domestic developments and challenging global cues. Domestic factors such as GST rate rationalisation, a good monsoon, and revival in government capex were positive drivers, boosting consumption potential ahead of the festive season. Yet, global developments—particularly US tariffs and changes in visa rules targeting the services sector—created headwinds for export-oriented industries. India’s current account deficit narrowed sharply to 0.2% of GDP in Q1 FY26, supported by resilient services exports and record-high remittances of US$35.3 billion. The Indian rupee, despite global volatility, remained relatively stable and was among the least volatile EM currencies, underpinned by healthy foreign exchange reserves, robust inflows, and sound macro fundamentals.
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On the policy front, GST rate rationalisation and recent fiscal measures have provided a timely boost to consumption ahead of the festive season. These domestic tailwinds, coupled with improving rural sentiment and stable liquidity conditions, are expected to support corporate earnings over the medium term. In the near term, earnings growth may remain subdued since most of the GST 2.0 impact will only be visible from late September onwards. Tariff negotiations with the US remain a key macro risk, particularly for the export oriented sectors.
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Valuations across mid-cap and small-cap segments stayed above their long-term averages, suggesting limited room for short-term re-rating, selective opportunities exist for long-term investors amid ongoing sectoral shifts. As India continues to navigate a dynamic global environment, maintaining a disciplined and well-diversified asset allocation remains key. Flexi-cap and diversified equity strategies are well-positioned to benefit from market volatility, while long-term investors can use intermittent corrections as opportunities to accumulate quality exposure aligned with their risk profiles. India’s capex-led growth momentum, combined with structural reforms and robust domestic demand, continues to underpin a favourable multi-year equity market story—despite the possibility of intermittent near-term headwinds.

Debt Market Outlook
India’s debt market remains well-supported as inflation stays benign and domestic liquidity remains comfortable. The RBI has already lowered the repo rate by 100 bps in 2025 to 5.5%, while also cutting the CRR to 3.5% and maintaining SLR at 18% to sustain liquidity and credit growth. Through OMO purchases and FX swaps, the central bank has ensured ample system liquidity. Inflation is projected to average around 2.6% for FY26, aided by GST rate rationalisation and easing input costs.

Globally, while the US Fed has started cutting rates, long-term US yields remain elevated, reflecting fiscal concerns and sticky inflation expectations. The full impact of earlier rate hikes and recent fiscal measures — including front-loaded monetary actions — is still working its way through the economy, prompting the RBI to stay watchful.

Over the next few quarters, the central bank is likely to assess how GST reforms influence demand and consumption trends before deciding on further easing. Although the RBI’s current stance is neutral, it remains flexible to cut rates by another 25–50 bps if growth momentum and private capex stay subdued. Overall, bond yields are expected to remain soft, supported by easy liquidity and a measured easing bias extending into FY27.

Overall, the outlook for fixed income remains constructive. Easy liquidity, controlled inflation, and potential foreign inflows point to stable-to-softer yields. Investors may prefer a mix of quality sovereign and corporate bonds, with accrual strategies likely to outperform in the medium term, while dynamic and short-term bond funds remain suitable amid near-term volatility.

Sep

GST Reforms Boost Equities, Debt Markets Weigh Fiscal Risks

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Equity Market Outlook
Indian equity markets are currently navigating a challenging phase, shaped by global uncertainties and fresh trade disruptions. After enduring significant headwinds in August, sentiment remains cautious yet constructive.
The imposition of a 50% US tariff on Indian goods, alongside moderate earnings growth and higher bond yields, pressured valuations and weighed on investor confidence. On the positive side, the government's move to reduce GST rates and streamline them into two slabs is being viewed as a strong domestic catalyst, expected to stimulate consumption, improve manufacturing competitiveness, and enhance corporate margins, particularly for sectors such as FMCG, consumer durables, and automobiles. Adding to the optimism, Q1 FY26 GDP growth of 7.8% YoY, well above consensus estimates, and a 17-year high manufacturing PMI of 59.3, reaffirmed the strength of India's underlying domestic growth momentum.
Flows remain divided, with FIIs net selling Rs. 46,903 crore amid tariff concerns and rich valuations, while DIIs absorbed the supply with net inflows of Rs. 94,829 crore, supported by steady retail participation and a positive advance/decline ratio (1,945/862), which led to broad market strength, especially in mid- and small-cap segments. The India VIX slipping below 12.5 indicates reduced near-term volatility. Globally, softer US inflation has lifted expectations of a Fed rate cut, and Eurozone PMI returning to expansion further boosted risk appetite, benefitting Indian IT and export-oriented stocks.
In the near term, markets are likely to trade range-bound with a positive bias, supported by GST reforms, festive demand, and resilient domestic flows, even as tariff negotiations with the US remain the biggest swing factor. A resolution could unlock upside potential and drive Nifty towards 26,000–26,500 by year-end, while prolonged tariff pressures could weigh on export-heavy sectors. Corporate profit growth is expected to sustain in low double digits, led by BFSI, autos, consumption, and selective industrial plays, with valuations finding support at lower levels.
Looking ahead, India's structural growth story remains intact. Healthy bank and government balance sheets, the China+1 manufacturing shift, infrastructure and renewable energy investments, and deepening domestic investor participation all provide multi-year tailwinds. While near-term volatility cannot be ruled out, the long-term outlook remains positive, with equities expected to deliver 12%–16% CAGR over the next 3–5 years, making buy-on-dips and diversified allocations the preferred strategy.

Debt Market Outlook
India's debt market reflects a phase of measured optimism amid steady macro fundamentals and evolving policy signals. The RBI is expected to keep its policy rate unchanged at 5.50% in the upcoming policy review, supported by contained inflation and moderating growth indicators. However, yields have edged higher, with the 10-year G-Sec rising to 6.59% from 6.38% last month. The steepening of the curve has been driven by supply pressures at the longer end, with the 10–30 year G-Sec spread widening to ~70 bps (from ~30 bps in February), muted bank demand, and increased state borrowing, which has pushed SDL spreads higher by 15–20 bps.
Liquidity remains comfortable, aided by RBI's Variable Rates Reverse Repo (VRRR) operations, but fiscal concerns are re-emerging. GST rationalisation measures are expected to lower indirect tax revenues by 20–30 bps, while US tariffs on Indian exports could exert pressure on both government collections and nominal GDP growth, adding to long-end supply anxiety. Participation from PSU banks in longer-tenure bonds has slowed due to portfolio constraints, and spreads between AAA corporates and G-Secs have expanded by 20–25 bps as investors remain selective amid heightened policy and fiscal risks. On the global front, foreign portfolio investors (FPIs) have provided strong support, with net inflows of over ₹13,000 Cr into Indian debt in August 2025. Expectations of US Fed rate cuts (~50–80 bps by March 2026) could further bolster investor appetite and support flows into domestic debt markets, partially offsetting these domestic headwinds.
Looking ahead, the outlook remains positive but cautious. While the RBI's neutral stance leaves room for further rate easing if growth slows, rising fiscal pressures, elevated long-end spreads, and external trade uncertainties may keep volatility high. Investors should focus on short-to-medium duration strategies - 1–4 years for short-term allocation and 4–7 years for medium-term positioning - balancing yield opportunities with prudent risk management. Government securities continue to offer a stable core, while selective exposure to AAA-rated corporate bonds can enhance portfolio returns. Staying agile and closely tracking both domestic and global developments will be critical in navigating the current environment.

AUG

India Balancing External Headwinds with Internal Resilience

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Equity Market Outlook
Indian equity markets are navigating a challenging environment marked by global uncertainties and fresh trade disruptions. The recent imposition of a 25% tariff by the US on Indian exports, affecting goods worth nearly $87 billion, has heightened risk-off sentiment. This move, linked to trade imbalances and India's increased ties with Russia, has pressured sectors such as pharmaceuticals and electronics, which are key export drivers. This triggered FII outflows and pushed indices such as the Nifty 50 near the critical support levels of around ~24,600; however, the DIIs provided a degree of support through selective buying, preventing a deeper correction.
Despite these external shocks, domestic economic signals remain firmer. July's GST collections rose 7.5% year-on-year to ₹1.96 lakh crore, and India's PMI for manufacturing and services continues to reflect robust business activity well above the 50 expansion threshold. Easing inflation—declining to around 2.1% in June, the lowest in years—has bolstered consumer confidence and supports the RBI's cautious monetary easing stance. Though the RBI has already cut rates by 100 basis points this year, further policy decisions hinge on global uncertainties and the evolving inflation landscape.
Growth projections remain upbeat with projected GDP expansion in the 6.4%–6.7% range for FY2025-26, underpinned by resilient domestic consumption, improving infrastructure, and policy focus on high-growth sectors such as technology, artificial intelligence, and renewable energy. India's active pursuit of trade agreements with the US, UK, and EU could help mitigate recent tariff setbacks while opening new avenues for employment, capital investment, and exports in higher-value segments.
Given the current scenario of external headwinds combined with strong internal fundamentals, investors are advised to adopt a cautiously balanced approach. Maintaining diversified portfolios with a tilt towards quality large-cap stocks and defensives is prudent. Active risk management and close monitoring of policy developments, global trade dynamics, and earnings delivery will be key. Volatility may persist in the short term, but disciplined, long-term investment aligned with India's stable growth trajectory can offer rewarding prospects.

Debt Market Outlook
India's debt market reflects a phase of cautious optimism amid steady macro fundamentals and evolving policy signals. The RBI is expected to hold its policy rate steady at 5.50% in the August monetary policy meet amid tame inflation and lingering global uncertainties—especially US tariffs and geopolitical tensions.
Government bond yields have remained largely stable, with the 10-year Gsec yield trading in a narrow range of 6.35%–6.40%. This range-bound movement reflects market confidence in the RBI's consistent monetary policy stance and contained inflation outlook. Liquidity remains comfortable, aided by the RBI's active operations like Variable Rate Reverse Repo (VRRR) auctions. Demand for government securities continues to be robust, driven by strong participation from banks, mutual funds, insurance companies, and foreign portfolio investors.
Looking forward, the debt market outlook is positive but cautious. The RBI's neutral policy stance leaves scope for further rate easing if domestic growth slows or inflation stays within comfort levels. However, global uncertainties and geopolitical tensions may continue to induce intermittent volatility. Investors should focus on short to medium-duration debt instruments with strong credit quality, balancing yield generation with prudent risk management. Government securities offer a stable core, while selective exposure to high-quality corporate bonds can help enhance portfolio returns. Staying nimble and aligned with evolving domestic and global macro developments will be key in navigating the current environment.

jul

India’s Growth Story Gains Steam, But Markets Eye Earnings & Global Risks

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Equity Market Outlook
India’s equity markets are entering the second half of 2025 on a strong footing, supported by solid macroeconomic fundamentals and accommodative policy measures. S&P Global Ratings has recently raised India’s GDP growth forecast to 6.5%, citing expectations of a normal monsoon, lower crude oil prices, and monetary easing. Inflation has moderated to ~2.8%, well within the RBI’s comfort zone, enabling 100 basis points of repo rate cuts and a phased 100 bps CRR reduction in the first half of the year. These moves have boosted liquidity and set the stage for sustained credit growth. Equity benchmarks such as the Sensex and Nifty have already delivered healthy gains in H1, with prospects for continued momentum in domestic consumption, real estate, and select mid- and small-cap segments. That said, Nifty 50 P/E valuations remain at 23, which is slightly higher than its historical average and is fairly valued, potentially limiting further immediate upside, and the market may consolidate until further earnings guidance is provided. Geopolitical tensions in the Middle East, fluctuations in crude prices, and uncertainty around US trade policy following the end of the 90-day tariff pause are likely to keep investor sentiment cautious. The upcoming Q1 FY26 earnings season and management commentaries will be crucial in assessing the demand outlook ahead of the festive season. Meanwhile, export-oriented sectors could face headwinds from a fragile global economic backdrop and unresolved trade disputes. Over the medium term, the outlook remains constructive, underpinned by cyclical recovery, strong nominal GDP growth, and improving corporate earnings. However, investors should be prepared for bouts of volatility from external shocks and sudden shifts in global risk appetite. In this environment, maintaining a well-diversified portfolio with a higher allocation to large-cap and flexi-cap strategies can help navigate overvalued areas of the market and manage risk more effectively over the long term.

Debt Market Outlook
India’s debt markets are expected to remain broadly supportive in the second half of 2025, anchored by healthy macro fundamentals and the substantial liquidity infused earlier this year. Inflation has eased to around 2.8%, while GDP growth projections have been revised higher to 6.5%, creating a favourable environment for bonds, particularly in the short- to medium-term segment. The RBI’s cumulative 100 bps repo rate cuts will lower the borrowing costs, and the CRR reduction to 3% would inject approximately ₹2.5 trillion of liquidity into the market. With the RBI shifting its stance from accommodative to neutral and inflation now at multi-year lows, further rate cuts appear unlikely in the near term. Given this policy transition, the scope for additional duration gains has diminished. Accordingly, investors may be better served by focusing on accrual-oriented strategies rather than taking aggressive duration calls, as the market adjusts to a more balanced policy environment in the quarters ahead.

JUN

India Markets Stabilize on Geopolitical Ease, India-UK FTA, and RBI Support

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Equity Market Outlook
May 2025 proved to be a stabilizing month for Indian equities, marked by easing geopolitical and trade tensions. The ceasefire between India and Pakistan helped calm market nerves, while global sentiment improved as the US and China appeared to step back from escalating trade hostilities. A significant milestone was the signing of the India–UK Free Trade Agreement, boosting India's trade prospects. These developments supported a rebound in global markets, with emerging market equities and precious metals leading performance year-to-date amid a weakening dollar.

Foreign Portfolio Investors continued to buy into Indian equities for the second straight month, while domestic SIP flows remained steady. Although Q4FY25 corporate earnings showed single-digit growth, they were in line with expectations, preventing further earnings downgrades.

The Reserve Bank of India's aggressive easing across rates, liquidity, and regulation is expected to boost credit growth and stimulate the economy. Falling bond yields have made equity valuations relatively attractive, with sentiment indicators also cooling from previously stretched levels. While the India–UK FTA and potential deals with the US and EU are positive, export growth remains vulnerable to global economic uncertainty.

Equity valuations are currently near long-term averages, and sentiment indicators remain neutral, offering a balanced risk-reward outlook. We believe investors should build a well-diversified portfolio for the long term, with a higher weightage towards large and flexi-cap funds, which will help them navigate the overvalued pockets of the equity markets.

Debt Market Outlook
The Indian debt market outlook remains constructive, buoyed by the RBI's continued expansionary stance. The RBI has already implemented a 50 bps rate cut in 2025. This signals apro-growth approach, especially as core inflation trends downward and external uncertainties recede. The RBI may further ease rates by an additional 50 bps spread across the next two quarters, supported by liquidity-enhancing tools such as CRR or SLR adjustments. Such measures are expected to enhance credit offtake and stimulate both consumption and private capex, providing a significant boost to economic growth.

In tandem, the RBI's recent liquidity infusion of ₹1.25 lakh crore via open market operations has enhanced systemic liquidity, which, coupled with a possible benign inflation trajectory aided by anormal monsoon, supports a positive outlook for fixed income. Globally, a pause in US-China trade tensions and weakening US growth may trigger rate cuts by the US Fed, making Indian debt more attractive. We recommend aligning portfolios with short to medium-duration funds for stability and selectively increasing exposure to longer-duration funds or dynamic bond funds to capture the benefits of a potential downward shift in the yield curve.

We continue to believe in the downward interest rate regime, and investors should consider increasing their allocation to longer-duration instruments, especially gilt funds and high-quality corporate bonds. Meanwhile, tactical exposure to ultra-short and low-duration funds could effectively capture gains from a likely decline in short-term yields.

May

Cautious Optimism Amid Global and Domestic Shifts

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Equity Market Outlook
Global equity markets, including India, face mixed signals as we move into mid-2025. Economic growth remains resilient, but elevated valuations, especially in the US, have raised concerns about potential market corrections if macroeconomic or earnings disappointments emerge. Despite this, the prospect of interest rate cuts by major central banks has provided support to global equities. Domestically, the Indian equity market showed resilience in April, reversing previous outflows with strong FPI inflows bolstered by favourable global cues, a strengthening rupee, and optimism surrounding a potential U.S.-India trade agreement. However, volatility remains a key feature, with geopolitical risks and policy uncertainties, particularly surrounding the India-Pakistan border situation, adding layers of complexity to the outlook.

India's strong macroeconomic fundamentals, including robust domestic consumption and government-led infrastructure initiatives, position the market to benefit in the medium to long term. While valuations are high, certain sectors, including financials, consumption, and defence, remain attractive. The market is expected to consolidate in the near term as investors digest Q4FY25 corporate earnings and macroeconomic data.

While near-term market fluctuations may test investor patience, history has shown that such corrections often present valuable entry points. For disciplined investors with a long-term perspective, the current market scenario offers a compelling opportunity to participate in India's growth trajectory. We believe investors should revisit their asset allocation and start investing in equity to build a well-diversified portfolio for the long term, focusing on sectors with strong fundamentals and growth potential. A strategic, long-term approach will help navigate volatility and capitalize on India's promising future.

Debt Market Outlook
The Indian debt market is navigating a dynamic environment marked by global uncertainties and evolving domestic policy measures. In a key move, the Reserve Bank of India (RBI) reduced the policy repo rate by 25 basis points and shifted its stance from 'Neutral' to 'Accommodative', signalling a pivot toward a more supportive monetary policy. Additionally, the RBI announced a significant liquidity infusion of ₹1.25 lakh crore to bolster economic activity amid ongoing geopolitical tensions, such as the India-Pakistan border situation, and global trade headwinds. Despite these challenges, India's macroeconomic fundamentals remain resilient, with inflation steady at around 4% and growth moderating in a controlled manner. This stability, combined with softening yields and robust demand for quality debt instruments, points toward a constructive outlook for the debt market. Further yield compression is possible if foreign portfolio inflows pick up, although global volatility and domestic borrowing levels remain key variables.

Looking ahead, we expect yields to drift lower over the coming months, particularly if inflation stays within the RBI's comfort zone and global conditions become more benign. The RBI's pro-growth approach, a stable currency, and sustained corporate credit demand position government securities to potentially outperform corporate bonds over the medium to long term. We believe investors should consider increasing their allocation to longer-duration instruments, especially gilt funds and high-quality corporate bonds, which are well-placed to benefit from the ongoing easing cycle. Meanwhile, tactical exposure to ultra-short and low-duration funds could effectively capture gains from a likely decline in short-term yields. A balanced, duration-aware approach focused on credit quality may offer an optimal risk-reward outcome in the current market environment.

Apr

Balancing Global Headwinds and Domestic Resilience

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Equity Market Outlook
The Indian equity market enters fiscal 2026 under the shadow of rising global uncertainty, heightened by US President Donald Trump's announcement of "reciprocal tariffs" on April 2, 2025. These measures include a baseline 10% duty on most imported goods, with even higher tariffs on select countries - India among them, facing a 26% levy on exports to the US. This move has triggered a fresh wave of global trade tensions, rattling financial markets and sparking fears of a broader economic slowdown.

Despite these global headwinds, India's domestic fundamentals offer relative stability. The economy is projected to grow between 6.3% and 6.8% in FY26, underpinned by strong consumption, a capex push, and moderating inflation. However, export-driven and labour intensive sectors such as textiles, agriculture, and manufacturing are likely to be impacted due to an increase in tariffs by the US.

All eyes are now on the upcoming RBI policy meeting, where any dovish tilt amid global volatility could lend near-term support to markets. While volatility is expected to persist, India's structural growth story and domestic demand resilience provide a foundation for cautious optimism in navigating an increasingly complex global economic landscape.

While near-term market fluctuations may test investor patience, history has shown that such corrections often present valuable entry points. For disciplined investors with a long-term perspective, the current market scenario offers a compelling opportunity to participate in India's growth trajectory. We believe investors should revisit their asset allocation and start investing inequity to build a well-diversified portfolio for the long term.

Debt Market Outlook
The Indian debt market is poised for potential shifts influenced by both domestic and global factors. Domestically, the Reserve Bank of India (RBI) is anticipated to implement a 25 basis points rate cut in its upcoming Monetary Policy Committee meeting, responding to moderated inflation and signs of slowing GDP growth. This move aims to stimulate economic activity and is expected to lead to a downward adjustment in the yield curve, with the 10-year government bond yield projected to range between 6.65% and 6.75%.
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Globally, developments such as the Federal Open Market Committee's (FOMC) deliberations on interest rate reductions and movements in the US dollar are likely to impact emerging markets, including India. Additionally, potential tariff-related announcements by the US could influence global growth and rate cycles, adding layers of complexity to the investment landscape. Despite global headwinds, India's strong economic fundamentals and proactive policies provide stability, making fixed income an appealing investment avenue.

We believe investors should focus on longer-duration instruments, with gilt funds and high-quality corporate bonds presenting attractive opportunities in the current easing cycle. On the short end of the curve, ultra-short and low-duration funds may benefit from tactical allocations, given the likely downward movement in short-term yields.

Mar

A Window of Opportunity Amidst Corrections

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Equity Market Outlook
As of February 2025, the Indian equity market has experienced a significant downturn, with large-cap indices declining more than 15% and mid and small-cap declining more than 20% over the past five months. The recent correction in the Indian equity market has brought valuations to more reasonable levels, with the Price-to-Earnings (P/E) ratio now below 20. This presents an attractive opportunity for long-term investors seeking to capitalize on India's structural growth story. While short-term volatility may persist due to global uncertainties, including trade tensions and geopolitical risks, the long-term outlook remains robust.

India continues to be one of the fastest-growing economies, supported by strong domestic consumption, favourable demographics, and ongoing economic reforms. Government initiatives aimed at boosting infrastructure, manufacturing, and rural development are expected to drive demand across sectors, enhancing corporate earnings growth. Additionally, easing inflation and a stable interest rate environment could further support market sentiment. The banking sector's improving asset quality and credit growth also provide a strong foundation for sustained economic expansion. As companies adapt to evolving global challenges, sectors like technology, financial services, and consumer goods are well-positioned for long-term growth.

While near-term market fluctuations may test investor patience, history has shown that such corrections often present valuable entry points. For disciplined investors with a long-term perspective, the current market scenario offers a compelling opportunity to participate in India's growth trajectory. We believe investors should start investing in equity and build a well-diversified portfolio for the long term.

Debt Market Outlook
India's debt market in 2025 is shaped by domestic policy actions and global uncertainties. The Reserve Bank of India (RBI) has infused over $21 billion to ease liquidity and support growth. Corporate bond issuances hit a record ₹10.67 trillion in the last fiscal year, driven by lower yields and strong investor demand. Government borrowing is expected to rise modestly to ₹14.28 trillion in FY 2025-26, with improved liquidity supporting smooth absorption.

However, global risks remain a challenge. Uncertainty over the US Federal Reserve's rate cuts due to persistent inflation and strong labour market data may lead to prolonged high interest rates, triggering capital outflows from emerging markets like India. Additionally, geopolitical tensions in the Middle East and Eastern Europe continue to impact global energy prices, posing inflation risks. Despite global headwinds, India's strong economic fundamentals and proactive policies provide stability, making fixed income an appealing investment avenue.

We believe investors should focus on longer-duration instruments, with gilt funds and high-quality corporate bonds presenting attractive opportunities in the current easing cycle. On the short end of the curve, ultra-short and low-duration funds may benefit from tactical allocations, given the likely downward movement in short-term yields.

Feb

Global Uncertainty, India's Resilience, and Budget 2025

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Equity Market Outlook
The global equity market remains cautiously optimistic, shaped by a mix of inflation concerns, economic trends, and newly introduced Trump policies. After a strong start in January 2025, global equities are navigating a delicate balance of economic forces, with markets remaining highly sensitive to inflation data. Trump's trade policies, including potential tariffs and diverging central bank actions, might further add to market complexity. Global investors are currently favouring US and European equities over emerging markets.

On the domestic front, the Indian equity market is poised for a recovery, supported by strong domestic consumption, increased infrastructure investments, and favourable economic policies. The Union Budget 2025-26 has introduced growth-oriented measures, including the elimination of income tax liability for individuals earning up to INR 12 lakhs, which is expected to boost middle-class spending and corporate earnings. While global uncertainty persists due to trade tensions and restrictive immigration policies under Trump 2.0, India's resilience, driven by internal demand and policy support, provides a stable foundation for market growth.

With GDP growth projected between 6.3% and 6.8%, key sectors such as renewable energy, technology, and manufacturing are set to attract significant investment. However, challenges remain, including stretched market valuations, foreign investor outflows, and global macroeconomic risks that could lead to short-term volatility. Given the high valuations in the mid-cap and small-cap space, investors should consider shifting towards large-cap and flexi-cap funds to build a well-diversified portfolio for the long term.

Debt Market Outlook
The outlook for the Indian debt market is optimistic, shaped by the Union Budget 2025-26, the RBI monetary policy, and global economic factors. The government's commitment to fiscal consolidation, targeting a fiscal deficit of 4.4% of GDP in FY26 (down from 4.8% in FY25), is expected to reduce borrowing pressures and ease bond yields. Net market borrowings are projected at ₹11.54 lakh crore, slightly lower than the previous year, further stabilising yields.

The RBI's monetary policy and liquidity management will be crucial. Expectations of a 25 bps rate cut in the February RBI policy meeting are present, with the potential for further cuts during CY25. Measures like Open Market Operations (OMOs) and Variable Rate Repos (VRR) are expected to maintain stability. Global factors, particularly US Federal Reserve rate decisions, will also influence the Indian debt market.

We believe that the investors should focus on longer-duration instruments, with gilt funds and high-quality corporate bonds presenting attractive opportunities in the current easing cycle. On the short end of the curve, ultra-short and low-duration funds may benefit from tactical allocations, given the likely downward movement in short-term yields.

Jan

Global Shifts and Domestic Growth: Strategies for 2025 Markets

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Equity Market Outlook
The global equity markets in 2025 are expected to contend with a mix of opportunities and challenges driven by monetary policy decisions, geopolitical uncertainties, and corporate earnings growth. The US Federal Reserve's data-dependent stance will shape risk sentiment, with inflation, labour market dynamics, and fiscal policy under the new administration playing pivotal roles. While a softening interest rate environment may provide a tailwind to equities, sectors sensitive to economic cycles, such as technology and consumer discretionary, are likely to remain under scrutiny.
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In India, the equity market outlook for 2025 remains cautiously optimistic, supported by structural reforms, improved macroeconomic indicators, and the easing of inflationary pressures. The moderation in interest rates expected through the year could enhance liquidity, lower the cost of capital, and provide a boost to earnings across interest-sensitive sectors like banking, real estate, and infrastructure. The upcoming Union Budget will also be a key event, with potential policy measures focused on growth, investment, and fiscal consolidation likely to set the tone for market performance. Corporate earnings growth in India is projected to strengthen, with sectors such as IT, manufacturing, and consumer goods leading the way, driven by global demand recovery and domestic consumption.

For investors, the current market volatility presents opportunities to focus on long-term growth drivers and the ongoing corrections should be seen as opportunities to accumulate fundamentally strong businesses at attractive valuations. Maintaining a diversified portfolio and leveraging the primary market can help mitigate risks and capitalize on future growth potential.

Debt Market Outlook
In December, the RBI chose to hold interest rates steady despite the US Federal Reserve implementing a 25-basis point rate cut. With the Trump administration set to take office in January and the fiscal budget approaching, uncertainty looms over the trajectory of the fixed-income market.

In India, the fixed-income market is positioned for gradual easing in 2025, contingent on inflation dynamics and fiscal prudence. CPI inflation, currently buoyed by softening food prices, is expected to trend lower, giving the RBI room to maneuver with rate cuts. However, the magnitude of rate reductions may remain shallow as the RBI balances domestic growth priorities against external vulnerabilities, including currency fluctuations and global financial conditions.
Government borrowing is anticipated to stay moderate, supported by fiscal consolidation measures, which could help maintain a favourable supply-demand balance in the debt market. With India's inclusion in the JPMorgan Emerging Bond Index in 2024 and the Bloomberg Emerging Bond Index from January
2025, substantial inflows into Indian government securities (G-Secs) and corporate bonds are expected from both domestic and international investors.

We believe that the investors should focus on longer-duration instruments, with gilt funds and high-quality corporate bonds presenting attractive opportunities in the current easing cycle. On the short end of the curve, ultra-short and low-duration funds may benefit from tactical allocations, given the likely downward movement in short-term yields.

dec

Market Adjusts to Trump’s Victory and India's Slowing Growth

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Equity Market Outlook:
The U.S. election results played a pivotal role in shaping market performance in November 2024. Donald Trump's presidential victory, coupled with the Republican Party securing a majority in both chambers of Congress, has sparked optimism about policies that could reinforce American economic and market leadership. Market sentiment reflects expectations of a pro-growth agenda, though potential tariffs under the Trump administration could pose challenges for global trade, especially impacting countries like China, Canada, and Mexico. These policy developments could ripple through the global economy, influencing trade dynamics and investment flows. In contrast, India faced domestic economic challenges, with Q2 FY25 GDP growth slowing to a seven-quarter low of 5.4%, down from 8.1% in the same period last year and 6.7% in the previous quarter. The slowdown was driven by weaker consumption, subdued government spending, tighter credit regulations by the RBI, and adverse weather affecting key industries. Despite these headwinds, India's economic fundamentals remain robust, and the outlook for growth is supported by rising demand, a revival in government expenditure, and favorable macroeconomic indicators. Looking ahead, the Indian equity markets appear well-positioned, benefiting from a stable macroeconomic environment characterized by moderate growth, controlled inflation, and balanced interest rates. Microeconomic factors, such as corporate earnings, improving balance sheets, and a positive capital expenditure outlook, further reinforce this optimism. While earnings growth in the first half of the fiscal year was subdued, a recovery is anticipated in the second half, supported by stronger business activity and policy measures. The recent correction in broader equity markets has alleviated some valuation concerns, creating opportunities for investors to focus on long-term growth drivers. This period of market volatility should be viewed as an opportunity to accumulate high-quality, fundamentally strong businesses at attractive valuations. To navigate the uncertain market environment, investors should maintain a diversified portfolio, capitalize on opportunities in the primary market, and focus on sectors poised for sustained growth. This strategy not only mitigates risks but also positions investors to benefit from the future growth potential of the Indian and global markets.

Debt Market Outlook:
Globally, inflation seems to be cooling off. This gives ammunition to the Central Bankers across to tackle muted growth projections with an agile Monetary Policy action, which is primarily driven by the lowering interest rates. The US is leading the rate-cut cycle, albeit with caution due to the regime change and its impact on the future economic landscape. China is continuing with strong economic support and has unveiled a new $1.4 Tn debt package to ease the financial strains of the local governments. China vowed to adopt a loose monetary policy for the next calendar year as well. CPI Inflation, especially food inflation, has been a bane in RBI's monetary policy action, leading to deferment of the rate cut to the next calendar year. However, for the first time in 4.5 years, RBI has reduced the Cash Reserve Ratio (CRR) by 50 bps to 4% which will be implemented in two phases of 25 bps each, taking effect on December 14 and December 28. In coming quarters as slack in growth becomes more visible, we can expect policy priority to shift from restraining inflation to supporting growth. Hence, for RBI there is an increased trade-off between growth and inflation. Growth is already moderating while inflation is yet to moderate in the coming months. The inflation pain might further extend owing to the expected capex spending from the government, picking up of rural spending due to a good monsoon, and a bumper wedding season. The Indian Bond Yield curve is anticipated to remain stable amid favourable demand-supply dynamics. Investors should consider medium- and long-duration funds like gilt funds with higher coupon rates offering good risk-reward trade-offs without undue duration risk.

nov

FII Outflows Amid Global and Domestic Uncertainty

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Equity Market Outlook:
Global macroeconomic factors, including the US presidential elections and the Federal Reserve's interest rate decision, are creating significant volatility across global markets. Additionally, investors are closely monitoring China's potential stimulus measures. In India, the market experienced selling pressure, with FIIs selling a record ₹1.14 lakh crore from the Indian equity market in October 2024 and pushing the India VIX by 21% in 1-month to reach 15.55. Despite these challenges, FPIs are reallocating investments into the primary market, particularly IPOs, suggesting strategic repositioning rather than an exit from Indian equities. India's economic outlook shows a mixed picture. While the festive season boosted automobile sales in October, other sectors like cement and credit growth indicate slower recovery. The September quarter saw a steeper-than-expected slowdown in corporate earnings, leading to significant downgrades for Nifty 50 companies. Despite these headwinds, domestic demand remains robust, and government initiatives are expected to support economic activity. The Reserve Bank of India and the finance ministry attributed the Q2 slowdown to temporary factors like heavy rains and the Pitru Paksha period, with expectations of a rebound driven by a good Kharif crop and improved rural consumption. For investors, the current market volatility presents opportunities to focus on long-term growth drivers such as corporate earnings and economic data. The ongoing corrections should be seen as opportunities to accumulate fundamentally strong businesses at attractive valuations. While global events like the US elections may impact short-term sentiment, the long-term prospects for Indian equities remain positive. Maintaining a diversified portfolio and leveraging the primary market can help mitigate risks and capitalize on future growth potential.

Debt Market Outlook:
The global rate cut cycle is on course, with more cuts expected from the US and other major economies in CY2024. While the RBI maintained a cautious stance on rate cuts at this stage, October's policy shift to ‘Neutral’ represents the first tacit acknowledgement of an impending rate cut cycle. It gives RBI maneuverability under uncertainty arising out of the recent US elections, and its impact on geopolitics and commodity prices. October also saw the inclusion of Indian government bonds in the FTSE Emerging Markets Government Bond Index, marking the third major index inclusion in the past year. This is especially important given that foreign investors' holding of Indian bonds is minuscule compared to other emerging markets, which are much smaller in size. The Indian Bond Yield curve is anticipated to remain stable amid favourable demand-supply dynamics. Investors should consider medium-duration funds and long-duration funds like gilt funds with higher coupons offering good risk-reward trade-offs without undue duration risk.

Oct

Geopolitical Tensions and Domestic Volatility

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Equity Market Outlook:
September 2024 saw significant global events, including a rate cut by the US Fed along with other major central banks and stimulus measures from China aimed at injecting long-term liquidity. Considering that China's stock markets are significantly undervalued, foreign funds might find their way out of Indian equities and towards China's stock markets. With the potential of FII flows moving out of India, the new geopolitical tension escalating between Iran and Israel, and the upcoming US election, the domestic equity market is expected to remain volatile in the coming months. Recent market surges have driven stock prices higher, raising concerns about overvaluation. The price-to-earnings multiples are at a slight premium to the 10-year averages across segments -- large-cap, mid-cap and smallcaps. However, the liquidity in Indian equity markets remains strong, with domestic inflows significantly exceeding foreign institutional investor (FII) flows and cash position of approx. INR 2 lakhs crore held by mutual funds will provide a cushion to the markets in case of any sharp corrections. Even though the long-term outlook remains positive, the market will remain volatile from the short to medium-term perspective. Hence, a diversified investment strategy with a focus on sectors like banking, consumer staples, etc., can help manage risks and capitalize on opportunities. A staggered approach with buy-on dips might be the right strategy from a near to medium-term perspective.

Debt Market Outlook:
In September, the US Federal Reserve cut rates by 50 basis points, with more cuts expected by year-end. In India, bond yields dropped due to declining crude oil prices and global bond yields. With the US Fed starting the rate cut cycle, the RBI is likely to join with expectations of one rate cut in CY 2024. Foreign Portfolio Investors continue to pour money into Indian sovereign securities after its inclusion in the JP Morgan Index, and as the weightage rises, the demand will go up among investors globally. The reasons supporting easing monetary policy in India are stacking up, such as record low core inflation, expected fall in food prices post-monsoon, and high real rates possibly restricting growth. As India's growth remains strong and geopolitical risks have increased, the RBI is likely to be cautious, and aggressive rate cuts are not expected. The Indian Bond Yield curve is anticipated to remain stable amid favourable demand-supply dynamics. Investors should consider medium-duration funds and long-duration funds like gilt funds to benefit from capital appreciation when rate cuts begin.

sep

Fed Rate Cuts Spark Global Market Adjustments

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Equity Market Outlook:
Globally, markets delivered mixed returns. US markets were shaken by Nvidia's earnings, which led to a 10% drop at its lowest point, erasing $300 billion in market capitalization. The narrative seems to be shifting from AI to beyond AI, primarily driven by the FED rate cut and the upcoming US presidential election. The Indian equity market has shown resilience, supported by moderating inflation, stable crude oil prices, easing 10-year government bond yields, a stable currency, and resilient corporate earnings. Recent market surges have driven stock prices higher, raising concerns about overvaluation. The price-to-earnings multiples are at a slight premium to the 10-year averages across segments - large-cap, mid-cap and small-cap. However, the liquidity in Indian equity markets remains strong, with domestic inflows significantly exceeding foreign institutional investor (FII) flows, providing stability to the markets. Even though the long-term outlook remains positive, from the short- to medium-term perspective, a diversified investment strategy remains key to managing risks and capitalizing on opportunities that might be available in defensive sectors like Pharma, FMCG, IT, etc. A staggered approach might be the right strategy from a near- to medium-term perspective till things play out.

Debt Market Outlook:
The Bank of Japan's decision to increase interest rates, combined with weaker labour data in the US, led to sharp volatility globally and a significant drop in bond yields across major economies, with the 10-year US bond yield trading close to 3.8%. The global environment is becoming more favourable for the rates markets, with expectations of 50 to 100 basis points of rate cuts by the Fed this calendar year. Domestically, the RBI kept the repo rate unchanged at 6.5%. Surplus domestic liquidity conditions have supported the softening of money market rates. Inflation is likely to be moderate due to a good monsoon, which should help cool off the perishable components of the food basket, while core inflation is expected to remain broadly under control. India bond yields may soften further due to global flows into debt markets, particularly with the ongoing JP Morgan index inclusion-related flows. The 10-year government securities yield is expected to trade in the range of 6.70-6.90% in the near term, with a potential downside towards 6.50% in the medium term. As India's growth remains strong and geopolitical risks have increased, the RBI is likely to be cautious, and aggressive rate cuts are not expected. The Indian Bond Yield curve is anticipated to remain stable amid favourable demand-supply dynamics. Investors should consider medium-duration funds and long-duration funds like gilt funds to benefit from capital appreciation when rate cuts begin.

All that glitters is, Gold!
Gold has surged more than 20% this year with multiple tailwinds such as geopolitical tensions, central bank purchases, etc. The historical inverse correlation between Gold and interest rates comes into the picture whenever Central Banks begin a rate cut or a rate hike cycle owing to the uncertainties around the new direction. The market already discounted a 25 bps rate cut from the US Fed in September 2024. If the Fed decides to cut rates more than this or signals a more dovish stance, it could trigger a fresh rally in gold prices. This is because such actions would suggest a more accommodative monetary policy, leading to a weaker US dollar and lower yields, both of which support Gold. In a recent report titled "Go for Gold", Goldman Sachs is urging investors to consider Gold as their top choice for the near future as it is seen as a strong hedge against economic uncertainty, and Goldman believes its price is likely to increase soon.

aug

Budget Stability and Global Rate Cut Expectations

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Equity Market Outlook:
The Union Budget was at the forefront of D-street conversations in July 2024. Right from expectations to takeaways, it has been grabbing all the headlines. Irrespective of not being a single-party majority government, the budget's focus on continuity of policies, capex spending, and infrastructure keeps the market view constructive in the near term. The government's support to the rural economy and the bottom of the pyramid with new employment and MSME policies could kickstart the consumption cycle. While the proposed tax revisions announced in the Union Budget 2024 caused jitters in the markets for a while, it continued its upward trajectory. Looking forward, the Indian stock market will continue to be influenced by global economic trends, fiscal policies, and sector-specific developments. US Fed policy movement, monsoon and quarterly earnings could be the major triggers for the market. As the market navigates uncertainties, a diversified investment strategy remains key to managing risks and capitalising on opportunities. A staggered approach might be the right strategy from a near- to medium-term perspective until things play out.

Debt Market Outlook:
From China to EA to the UK, we are now seeing the initiation of a policy rate cut cycle across the developed economies. The US Fed has also hinted that the rate cuts might begin from September 2024. However, an increasing trend in the US unemployment rate, along with cooling inflation print and other global events, might also prompt an ad hoc rate cut before September 2024. Coming to India, with a strong GDP, robust short- to medium-term economic outlook, favourable policies, inflation, and unemployment within the range, RBI might not have any incentive to cut rates unless there are multiple rate cuts from the FED. The Union Budget 2024-25 lowered the fiscal deficit to 4.9% of GDP for FY2025. Also, the inclusion of Indian G-Secs in the JP Morgan Emerging Markets Bond Index supported lower yields due to higher net inflows in July 2024. The market is anticipated to remain stable with further increases in liquidity. The outlook for debt markets remains optimistic as global rate market cues continue to reflect a dovish position. While the RBI is expected to maintain its current policy stance, any modification in its approach or tone could result in additional yield decreases. We expect the Indian Bond Yield curve to remain stable amidst favourable demand-supply dynamics. Investors should consider medium-duration and long-duration funds like gilt funds to benefit from capital appreciation when the rate cut starts.

Carry Trade & Currency Risk:
Carry Trade is a trading strategy that involves borrowing at a low interest rate, investing in a currency/ financial product with a higher rate of return, and profiting from the difference. According to the report, the Japanese Yen carry trade market is estimated at $20 trillion. Currency risk emanating from carry trade has been a threat hanging over the global interest rate hike cycle, thanks to the ultra-low interest rate and deflation spiral of Japan since the late 90s. Whenever there is a global rate hike, and Japan does not participate, it opens the door for Yen Carry Trade. This happened before during the earlier rate hike cycle of the 2000s, 2010s and now. Excess of carry trade leads to Carry crises and Currency Risk, and it starts to abate when the rate cut cycle globally, especially in the US, begins. The Bank of Japan's recent decision to increase the policy rate to 0.25% has triggered a bout of volatility in the global financial market. The policy rate hike has led to the appreciation of the Yen against the USD, from 162 to 142 Yen a dollar, adversely affecting the Yen Carry trade borrowers.

jul

Post-Election Recovery Drives Market Sentiment

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Equity Market Outlook:
Post the election day sharp reaction, India’s equity markets bounced back strongly. The broad market index, Nifty 50, was rallying ~10% from the bottom of the election result until the end of June 2024, reaffirming the strength of Indian capital markets and economy. Positive factors like strong GDP growth, stable current account, large forex reserves, the government's focus on building infrastructure and PLI schemes to boost manufacturing are contributing to this. A good monsoon, lower inflation, the upcoming budget, and the festive season could boost rural demand and the consumption cycle. However, given the current valuations, most of the positives are already priced in. The never-ending retail SIP strength that breached 21K Crore for the first time in June, along with FII turning positive post-elections, indicate a very positive momentum regarding the capital market flows, especially in the Large Caps. The multiples beyond the market leaders have expanded aggressively relative to the Large Caps, especially if we take a closer look at the Price-to-Book levels of the Mid and Small Caps. Even though the long-term outlook remains positive, it might be prudent to take cover with the Large Caps to weather any volatile movements from the short to medium-term perspective, due to geopolitical risks. A staggered buy-on-dips approach might be the right strategy from a near to medium-term perspective till things play out.

Debt & Others Market Outlook:
Market expectations regarding rate cuts in 2024 have changed multiple times – expectations of up to seven rate cuts by the US Federal Reserve in January have come down to just one or two now. After the US presidential debate, investors are gaming out an increasing likelihood that Biden will lose the presidential election. This possibility has traders actively betting on higher inflation in the near term, considering Donald Trump's pro-growth proposals. All eyes are now on the US Fed's FOMC meeting at the end of July 2024 for the rate cut policy and path, which will dictate the global central bankers' action going forward. Foreign inflows in Indian debt are on the rise. After the announcement of JP Morgan's inclusion of Indian Bonds in September 2023, we witnessed more than 1 Lakh Cr of inflows into the debt space. Average monthly flows before the announcement have been ~900 Cr; post the announcement, we have seen average monthly inflows of ~11,500 Cr per month. Bloomberg index inclusion in the future will further add to this positive inflow. We expect the Indian Bond Yield curve to remain flat amidst favourable demand-supply dynamics, though a lack-lustre start of the monsoons can put some short-term pressure on yields. We believe investors should consider medium-duration funds and long-duration funds like gilt funds to benefit from capital appreciation when the rate cut starts. Gold has surged 12% year-to-date, surpassing other major assets. Its rise is driven by central bank purchases, Asian investments, consumer demand, and geopolitical uncertainty. Looking ahead, its momentum hinges on economic indicators and potential rate cuts amid persistent but moderated inflation. Despite uncertainties, gold remains an integral part of a diversified investment strategy.

jun

Policy Uncertainty Clouds Indian Equity Market Outlook

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Equity Market Outlook:
The recent Indian election results have caused significant volatility in the equity markets. Despite the incumbent government securing a majority through the support of other parties, a reduced number of seats has led to investor uncertainty. Historically, election-induced volatility is short-lived, with markets realigning to economic fundamentals. Although there is political uncertainty, India's GDP growth remains robust, with projections for FY25 revised upward to 7.2%. The economy is supported by strong domestic consumption, a burgeoning middle class, and a recovering global economy. These factors provide a solid
foundation for continued economic expansion. The long-term outlook remains positive driven by India's underlying economic strength. However, from the short to medium-term perspective, The equity markets are likely to remain volatile as investors await more information on the new government's policy and budget direction. Beyond the domestic factors, global events such as the US elections, the rate-cut cycle, and geo-political tensions may also contribute to market fluctuations. Given the current market dynamics and economic fundamentals, portfolio diversification with a focus on long-term growth opportunities will be the key to achieving sustained investment success. Investors should consider diversifying across sectors and asset classes to mitigate risk and capture growth potential. It is critical for investors to ensure a proper portfolio allocation and follow a systematic approach to equities. A staggered buy-on-dips approach might be the right strategy from a near to medium-term perspective till things play out, as outlined above.

Debt Market Outlook:
S&P Global Ratings revised its outlook for the Indian economy to 'positive' from 'stable'. They affirmed the overall rating at 'BBB-', citing robust growth and improved quality of government expenditure, while signaling confidence in India's economic trajectory. This positive sentiment is likely to bolster the debt market as investor confidence grows. The outlook for the Indian debt market is buoyant due to low inflation and an accommodative monetary policy. The Indian government's decision to reduce T-Bill auction sizes by Rs.10,000 crore for the next six weeks also improved the debt market sentiment. Demand for Indian debt securities from insurance companies, pensions, and provident funds is growing robustly. This increasing demand is expected to provide a stable base for the debt market, particularly for long-term bonds, as these institutional investors seek safe and reliable returns. The RBI is likely to wait for the US Federal Reserve to change its stance before considering rate cuts. This cautious approach ensures that any rate cuts will be well-timed to maximize their positive impact on the economy. As expectations of a future rate cut grow, demand for long-term bonds is anticipated to increase, driving yields lower. We expect 10-year bond yields to be in the range of 6.80% to 7.10%. Given the current outlook, investors should consider medium to long-duration funds to capitalize on potential capital appreciation as rate cuts commence. These funds will benefit from the declining yield environment, providing higher returns as bond prices rise.

may

Opportunities Ahead: Leveraging Growth Amid Market Volatility

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As we edge closer to the midpoint of 2024, India remains a beacon of robust growth amidst a global landscape of uncertainty.
We believe the market is likely to be volatile in the short term, however, the long-term outlook is favourable. Investors should treat market dips as strategic opportunities to enhance and diversify their portfolios. Investors should consider defensive strategy by allocating a larger portion of their portfolio to large and flexi-cap funds.

The continuation of resilient economic activity, tighter jobs market, slowing pace of fall ininflation and rising uncertainty on the geo-political front have led to a significant downgrade inthe expectation of easing monetary policy by global central banks.
We believe investors should consider medium-duration and long-duration funds like gilt funds to get the benefit of capital appreciation when the rate cut starts.

Equity Markets: Strong Growth Ahead Despite Short-Term Volatility
As we edge closer to the midpoint of 2024, India remains a beacon of robust growth amidst a global landscape of uncertainty. Projections crown it the world’s fastest-growing major economy, fueled by strong domestic demand, a manufacturing push thanks to initiatives like "Make in India", and favorable demographics. The Indian economic growth is estimated to clock in at 6.6% GDP growth for 2024 and 2025, as per the recent OECD projections, making India thebest-performing amongst the G20 nations, followed by Indonesia and China. D17 The ongoing general elections 2024 with the hopes of the incumbent Prime Minister Narendra Modi retaining office for the third term being perceived as pro-reform and market-friendly are leading to increased investments in sectors likely to benefit from continued or new government policies. In the current earning seasons, 30 companies of Nifty 50 have announced their Q4 and FY 2024 results, with most of them declaring results either positive or in line with market expectations. From a sector perspective, results of domestic cyclicals are in line and/or slightly better, while defensives like IT & FMCG have been underwhelming. We believe the market is likely to be volatile in the short term, however, the long-term outlook is favourable. Investors should treat market dips as strategic opportunities to enhance and diversify their portfolios. Investors should consider defensive strategy by allocating a larger portion of their portfolio to large and flexi-cap funds.

Debt & Other Investment Options: Navigating a Shifting Market Landscape
The continuation of resilient economic activity, tighter jobs market, slowing pace of fall in inflation and rising uncertainty on the geo-political front have led to a significant downgrade in the expectation of easing monetary policy by global central banks. The unexpected surge in core Personal Consumption Expenditure (PCE) inflation figures in the US has driven yields higher, indicating that the Fed may delay rate cuts until inflation moderates. This supports a "higher for longer" scenario, contributing to upward pressure on yields. This has led to outflows from the domestic Indian Debt markets and a weaker local currency. The current outflow might continue marginally until the market stabilises after the inclusion of Indian bonds in the JPMorgan bond index in June. Post-inclusion, it is anticipated to attract USD 20 to 40 billion in the next two years. Gold is expected to further extend its upward momentum, and as per multiple analysts across Citibank, Morgan Stanley, JP Morgan, and individual analysts, gold is expected to reach $2,700/oz by the end of CY2024. We believe investors should consider medium-duration and long-duration funds like gilt funds to get the benefit of capital appreciation when the rate cut starts.

apr

3rd Edition

India’s GST Milestone and Inflation Eases Further

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To weather the upcoming uncertainty and volatility better, we can expect increased inflows towards the Large Caps. Increasing allocation to Large Caps while decreasing the exposure to Mid and Small-caps will help investors lock in the gains of FY 2023-24 and be well prepared for FY 2024-25.

Considering the potential macroeconomic challenges, we believe investors should consider additional ways to protect their portfolios and narrow the range of potential outcomes. Asset classes like Gold can help mitigate the key risks ahead by providing effective diversification and enhancing risk-adjusted returns.

Equity Markets: Navigating Uncertainties
The road ahead for FY 2024-25 might be a bit bumpy owing to major events like elections in India and the US, uncertainty around the quantum and number of interest rate cuts, and geopolitical tensions, which might impact the commodities prices, especially crude. However, the Indian economic growth looks healthy, as the World Bank revised its expected GDP print upwards to 7.5% for FY 2023-24. Also, RBI's baseline GDP projection for the FY 2024-25 stood at 7.4%. To weather the upcoming uncertainty and volatility better, we can expect increased inflows towards the Large Caps. Increasing allocation to Large Caps while decreasing the exposure to Mid and Small-caps will help investors lock in the gains of FY 2023-24 and be well prepared for FY 2024-25.

Debt & Other Investment Options: Falling Yields and Rising Opportunities
Market expectations suggest a continuation of range-bound behaviour with a tendency towards lower yields on the 10-year G-sec. We expect 10-year G-Sec to remain in the range of 6.95%-7.10%. The short end of the curve should start easing off as liquidity in the system increases. The announcement of the inclusion of Indian bonds in JP Morgan's indices from June has the potential to attract inflows and might put some downward pressure on the yields as well. We believe investors should consider medium-duration funds like banking and PSU funds and long-duration funds like gilt funds to benefit from capital appreciation when the rate cut starts. Considering the potential macroeconomic challenges, we believe investors should consider additional ways to protect their portfolios and narrow the range of potential outcomes. Asset classes like Gold can help mitigate the key risks ahead by providing effective diversification and enhancing risk-adjusted returns.

mar

2nd Edition

Navigating Market Highs and Strategic Investment Opportunities

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As we navigate through the second quarter of 2024, I'm pleased to report that our optimistic outlook for the Indian equity market remains strong. The market continues to outperform expectations, reaching new highs fueled by a robust domestic economy. India's Q3 FY 23-24 GDP growth of 8.4% paints a picture of a healthy and thriving business environment.

Given that we are likely nearing the peak of the interest rate cycle, we recommend investors seeking higher returns over the next few years to consider investing in medium-to-long duration debt funds to lock in the currently high yields. For those with shorter investment horizons or a more risk-averse approach, liquid funds remain a reliable option.

Equity Markets: A Promising Landscape with a Cautious Eye
The market continues to outperform expectations, reaching new highs fueled by a robust domestic economy. India's Q3 FY 23-24 GDP growth of 8.4% paints a picture of a healthy and thriving business environment. However, with the upcoming general elections on the horizon, we anticipate increased volatility in the market. Additionally, mid and small-cap stocks are currently trading at higher valuations compared to large caps, driven in part by strong domestic investment. To navigate these factors, we recommend building a well-diversified portfolio with a long-term focus. Mid and small-cap investors may want to consider strategically allocating a portion of their holdings to large-cap or flexi-cap funds. Furthermore, from a near-to-medium-term perspective, a "buy-on-dips" approach, strategically investing during market downturns, could be a successful strategy.

Debt & Other Opportunities: A Positive Outlook with High-Yield Potential
The debt market outlook remains positive following the recently announced interim budget for 2024. Bond yields across the curve have seen a welcome decline, reflecting lower-than-expected fiscal deficits and gross borrowing projections. Looking ahead, we expect the debt market to stay buoyant in the near term, driven by factors such as the anticipated initiation of a rate cut cycle by the Reserve Bank of India. Increased foreign portfolio investor (FPI) debt inflows and a favorable global rate environment are further tailwinds supporting the debt market. We anticipate the 10-year government security yield to hover between 6.7% and 7%. Given that we are likely nearing the peak of the interest rate cycle, we recommend investors seeking higher returns over the next few years to consider investing in medium-to-long duration debt funds to lock in the currently high yields. For those with shorter investment horizons or a more risk-averse approach, liquid funds remain a reliable option.

jan

1st Edition

Strong Equity Gains and Opportunities for 2024

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As 2023 ends, investors have much to look forward to in 2024. The prospect of interest rates staying higher for longer has dimmed. In fact, with inflation easing, investors are betting on rate cuts in 2024. At the macro level, policymakers are vested in creating and maintaining a feel-good atmosphere. As many as 40 countries, including India and the US, will hold general elections in 2024. To cajole voters, policymakers will try to keep fear levels down and contain bad news, which in turn can support the financial markets.

Given that we are at the peak of interest rates in India, we believe it is a very good time for investors to invest in fixed-income products and lock in the high yields to achieve higher consistent returns in the next few years. However, investors need to have a longer holding period of at least 2-3 years to ride through the intermittent volatility. Investors with shorter investment horizons and low-risk appetites should stick with liquid funds.

Equity markets concluded the year with a strong rally, supported by easing global inflation, declining crude oil prices, and expectations of rate cuts ahead. The Sensex and Nifty 50 delivered notable gains, while mid-cap and small-cap indices recorded annual returns exceeding 46%. Sectors like Power, Oil & Gas, and Metals led the charge, reflecting investor optimism.

India’s economic indicators remain robust, with GDP growth at 7.6%, record GST collections, and a narrowing trade deficit. In the debt market, falling yields create attractive opportunities in medium-to-long-duration bonds, while gold surged to an all-time high amid geopolitical uncertainties.

Looking ahead, a staggered investment approach in equities, combined with diversification across asset classes, is key to capitalizing on potential rate cuts, budget developments, and election-driven sentiment. A disciplined strategy will help navigate evolving opportunities and risks.

Bulletin 2024

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Bulletin 2023

10th Edition

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9th Edition

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8th Edition

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7th Edition

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dec

Market Rebound and Long-Term Investing Opportunities

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nov

Multi-Cap Funds Gain Traction Amid Market Shifts

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Multi-cap funds gain prominence, balanThe Indian economy shows resilience with robust GST collections and easing inflation, but rising unemployment and geopolitical uncertainties add complexity. Inflation eased to 5.02%, and the trade deficit narrowed significantly, reflecting stable fiscal health. However, equity markets saw declines across major indices, driven by higher U.S. Treasury yields and global tensions.

Multi-cap funds gained popularity, with their diversified approach offering exposure to large, mid, and small-cap segments. This category grew by 39% in assets under management over six months, underscoring its appeal as a balanced investment choice. Small and mid-cap funds also continue to draw investors, though experts advise caution and gradual allocations in line with risk tolerance.

In the debt market, rising yields present opportunities in medium-to-long-duration bonds, while short-term funds remain suitable for lower-risk investors. A diversified strategy and long-term perspective remain essential to navigate ongoing global and domestic challenges effectively.cing volatility with long-term growth potential. Equity markets show mixed performance, while debt market outlooks remain optimistic due to declining yields. Quality investments in diversified portfolios are emphasized.

sep

Indian Markets Hold Steady Amid Global Challenges

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aug

Driving Growth: EV Potential and India’s Market Momentum

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jul

Small-Cap Funds Lead Investor Bets in 2023

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jun

India Inc Dividend Soars Amid Global Market Volatility

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may

Gold Shines Amid Dollar Strength: Portfolio Opportunities

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Gold continues to assert itself as a safe-haven asset despite the strengthening dollar and rising interest rates. Global macroeconomic shifts, such as “de-dollarisation” and record gold purchases by central banks, have bolstered demand for the yellow metal. Domestically, India’s affinity for gold remains unwavering, driven by cultural significance, a weaker rupee, and high customs duties, further strengthening its position in portfolios.

Meanwhile, equity markets experienced a broad-based rally, with most sectors gaining significantly except for IT. Domestic economic indicators remain robust, with manufacturing and services PMIs touching multi-year highs and GST collections reaching record levels. Investors are encouraged to diversify their portfolios by combining target maturity funds (TMFs) with long-term income funds to capitalize on potential rate reversals and mitigate volatility. Amid moderating inflation and stabilizing markets, a balanced investment approach leveraging gold and other instruments provides a pathway for sustainable growth.

apr

3rd Edition

Debt Funds Lose Sheen: Navigating Tax Rule Tweaks

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mar

2nd Edition

New Financial Year: Charting Equity, Debt, and Gold Strategies

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Feb

1st Edition

Union Budget FY 2023-24: Growth, Reforms, and Fiscal Prudence

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