Market Outlook - July 2025

Market Update

The month of June continued with the trend of global uncertainties and events dictating sentiments. The Israel Iran conflict escalated mid-month, with even the US participating by bombing some sites of Iran. Crude oil jumped to almost $80 per barrel as the conflict looked like going out of hand. The US-led tariff news flow also continued to be a topic of tracking. Just as the markets were getting increasingly nervous, the news of ceasefire between Israel and Iran came in, leading to a sharp rally in global equity indices and an equally sharp fall in crude prices. Indian equities in June also firmed up on positive geopolitical news and lower crude prices. Sentiments were further boosted by India’s central bank, RBI, announcing a sharp 50 bps rate cut. Infusion of further liquidity in the system by way of a CRR (Cash Reserve Ratio) cut by a full 100bps, further buoyed sentiments. Indian equities led by benchmark Nifty rose 3.1% during June, its fourth straight month of gains. Broader markets outperformed with midcap and small cap indices up 4% and 6.7%, respectively. All the sectors were positive for the month, except for FMCG which was down 0.3%. IT, Healthcare and Real Estate were the top performers with 4.7%, 3.9% and 3.8% returns respectively. Global markets ended mixed with South Korea (+13.9%), Japan (+6.6%) and US S&P 500 (+4.6%) being the top gainers. Thailand (-5.2%), Indonesia (-3.5%) and France (-1.1%) were the biggest losers. Liquidity was strong with FPI’s buying equities worth $2.4 billion, while Domestic Institutional Investors (DIIs) continued their positive stance with a significant $8.5 billion inflow. Other Key International Developments include tariff hike on steel and aluminium imports from 25% to 50% by US, US Fed kept policy rate unchanged at 4.25-4.5%.