By Research desk
June 2025 Market Performance Recap:
The Indian stock market demonstrated robust positive momentum in June 2025, with key indices closing the month with significant gains, largely buoyed by favorable domestic policy actions and supportive global cues.
The benchmark NIFTY50 concluded June with approximately 3.10% gains, while the BSE SENSEX also showed a strong positive trend for the month. As of June 30, 2025, Nifty 50 closed at 25,517.05 and Sensex at 83,606.46.
The broader markets significantly outperformed the frontline indices in June, signaling a broad-based recovery and investor confidence. The Nifty Midcap 150 index advanced by 4.09%, and the Nifty Smallcap 250 index showed an impressive growth of 5.73%. This strong performance across market segments highlights robust investor interest beyond large-cap stocks. The broader Nifty 500 also gained 3.58%.
Key catalysts for market movement included crucial domestic policy decisions. The RBI Monetary Policy Committee (MPC) Meeting on June 4-6, 2025, was a major event that significantly influenced market sentiment. The RBI made a more aggressive-than-expected policy announcement, lowering the repo rate by 50 basis points (bps) to 5.50%. This decision was accompanied by a shift in policy stance from ‘accommodative’ to ‘neutral’, signaling confidence in controlling inflation while supporting growth. The RBI also maintained its GDP growth estimate at 6.5% for FY26 and revised down the inflation forecast for FY26 to 3.7%. Investors largely cheered these moves, boosting sentiment and sparking hopes of renewed credit offtake, especially benefiting banking and real estate sectors.
Global cues were mixed but generally supportive. Asian markets mostly closed in the green, driven by calming geopolitical concerns and hopes of slower US rate hikes. European markets also saw gains from various trade deals. Crude oil prices rose by 7.11% in June, fueled by rising geopolitical tensions, but this did not significantly dampen overall market sentiment in India.
Foreign Institutional Investors (FIIs) showed mixed activity in June. While there were days of net selling, particularly in early July, FII activity also showed signs of turning positive on some days, likely influenced by the RBI’s rate cuts and improved sentiment. Domestic Institutional Investors (DIIs) consistently provided strong buying support throughout the month, offsetting FII outflows on several occasions and providing a strong domestic cushion to the market. For instance, on June 20, 2025, FIIs were net buyers with ₹7,940.70 crores. However, in early July, FIIs turned net sellers, while DIIs continued their robust support, with DIIs being net buyers of ₹3,036.68 crores on July 2, 2025, when FIIs were net sellers of ₹1,561.62 crores.
Overall, June 2025 saw a resilient performance backed by strong domestic fundamentals and the RBI’s accommodative stance, especially the proactive rate cut. The market sentiment appears moderately bullish, with a close eye on the sustained impact of the rate cuts, ongoing global developments, and upcoming corporate earnings.
Sectoral performance
In June 2025, the Indian stock market showcased a strong sectoral performance, largely driven by favorable policy actions and market dynamics. Leading the gains, the Real Estate sector, represented by the Nifty Realty Index, surged by an impressive 9.4%, propelled by RBI rate cuts and robust developer earnings. The IT sector also saw a significant rebound, with the Nifty IT index recording a 4.36% return, benefiting from positive global tech sentiment and earnings expectations. Public Sector Banks (PSBs) demonstrated strong growth, contributing to a 2.8% rise in the broader Nifty Bank index, which achieved a new lifetime high. Other sectors that performed well included Media, with the Nifty Media index rallying 4.39%, Consumer Durables, which saw its index add 1.02%, Metals, gaining 1.33%, and Oil & Gas, with its index rising 1.10% due to recovering crude oil prices.
Conversely, the FMCG sector experienced a decline of -1.92% (QTD data), facing pressures from slower volume growth and cost concerns. Similarly, the Auto sector’s index declined by 0.4% as of June 30, impacted by profit booking and subdued export and rural sales. While the Nifty Pharma index ended June with a 3.01% gain, the broader healthcare sector has reportedly faltered in the first half of 2025, with the Nifty Pharma index falling over 6% in H1 2025. Overall, June 2025 was characterized by broad-based gains across most sectors, with Real Estate, IT, and banking leading the positive momentum, while FMCG and Auto encountered some headwinds.
In the following sections, we provide a more comprehensive examination, outlook and detailed insights of some major sectors:
Auto:
The Indian auto sector experienced a muted start to FY26, with Q1FY26 performance reflecting mixed trends across segments. Passenger vehicles (PVs), which initially saw record-high volumes in April 2025 driven by SUVs and EVs, witnessed a sharp moderation by June, with volumes declining ~6% YoY for the second consecutive month. The slowdown was largely attributed to tepid urban demand, high ownership costs, and a significant build-up in inventory levels, estimated at 50–52 days. Entry-level PVs continued to underperform due to affordability challenges and regulatory-driven cost increases, while the electric vehicle sub-segment within PVs showed relative strength due to increased consumer adoption and new model launches. Despite selective price hikes and richer product mixes, PV margins remained under pressure from aggressive discounting and weak operating leverage.
In the commercial vehicle (CV) segment, the weakness was more structural. CV sales remained subdued due to sluggish freight activity, low fleet utilisation, and financing constraints. Additional regulatory disruptions such as the implementation of A/C cabin norms created near-term supply-side friction. While the bus segment showed marginal relief, medium and heavy truck sales continued to be impacted. Channel partners remained cautious, citing lack of visibility on demand recovery.
Two-wheelers (2Ws) offered some relief, with volumes growing by ~4.8% YoY, driven by seasonal tailwinds, modest rural recovery, and robust export demand. Scooters outperformed motorcycles as urban buyers preferred lower-ticket, commuter options. Despite promotions and higher advertising spends, urban demand remained constrained by pricing fatigue and tighter financing. That said, average realizations rose by ~5.5% YoY, aided by a favourable product mix and growing share of premium motorcycles, supporting operating margins marginally.
Tractor sales remained resilient, supported by strong pre-kharif season demand, favourable crop prices, and a normal monsoon forecast. This, coupled with healthy rural liquidity and mechanisation trends, kept the outlook stable for the segment in the near term.
Auto ancillaries emerged as relative outperformers during the quarter, with aggregate revenue growth of ~16.6% YoY and EBITDA growth of ~18.5% YoY. This strength was underpinned by increasing content per vehicle—especially in EVs and premium vehicles—along with a healthy order book and capacity expansion. While rising input costs and currency depreciation did weigh on margins, companies with strong localisation strategies and export linkages managed to protect profitability. Export-oriented players continue to face macro headwinds from Europe and the Middle East, but domestic growth drivers remain intact.
Looking ahead, the sector is expected to recover gradually in H2FY26. Easing interest rates, supportive government policies (including income tax relief and infrastructure push), and improving rural sentiment could help revive volumes, particularly in the mass-market PV and 2W segments. However, challenges around affordability, regulatory transitions, and inventory overhangs may continue to limit near-term growth. Ancillaries with high EV exposure, strong execution, and diversified order books are likely to maintain their growth outperformance in the medium term.
Metals:
The Indian metals and mining sector witnessed a soft pricing environment in June 2025, particularly in the steel segment. Domestic steel prices declined by 1.4% MoM to ₹50,700/tonne, largely impacted by seasonal demand weakness due to the monsoon and tight market liquidity. On the global front, Chinese steel prices fell by 2.2% MoM to $445/tonne, with subdued domestic demand in China continuing to drive export-led strategies. Chinese exports rose by 1.1% MoM and 9.9% YoY to 10.6 million tonnes, even as the country’s steel industry PMI remained in contraction, highlighting weak internal consumption. Indian steel production increased 4.7% MoM to 13.5 million tonnes in May 2025, while China and global output rose modestly by 0.7% and 1.5% MoM respectively, reflecting steady supply trends.
Input costs trended lower during the month, providing some support to steelmakers’ margins. Coking coal prices declined sharply by 8.1% MoM to $136/tonne, while domestic and international iron ore prices fell by 4.8% and 4.4% MoM, respectively. Manganese prices remained stable. However, despite easing raw material prices, weak realisations are likely to keep profitability under pressure in the near term. Rising domestic capacity adds further supply-side pressure, limiting scope for price recovery even though overall demand remains healthy.
In the non-ferrous basket, global price trends turned positive in June. Aluminium prices rose by 6.5% MoM to $2,438/tonne, led by heightened geopolitical risks in the Middle East, a region accounting for around 9% of global aluminium output. Copper prices increased by 3.9% MoM to $9,869/tonne, driven by a 40% MoM drawdown in LME inventories, as traders diverted volumes to the US to benefit from rising local premiums. Zinc also saw a 5.6% MoM price rise to $2,741/tonne as inventories at LME dropped 16%.
Looking ahead, the domestic steel outlook remains neutral. While falling input costs could support margins, rising capacity and seasonal demand slowdown during monsoons are expected to cap any meaningful price upside. In the global context, the recently announced 50% US tariff on imported steel, aluminium, and copper products effective from August 2025 adds a layer of trade uncertainty. The sector’s performance will hinge on how global trade alignments evolve and how effectively producers manage costs amidst rich valuations. As such, a cautious approach is warranted in the near term.
Chemicals:
The Indian chemicals sector displayed a mixed performance in June 2025, amid ongoing global trade uncertainties and input cost fluctuations. The pricing environment remained subdued overall, impacted by rising freight costs due to renewed geopolitical tensions, notably around the Red Sea. Despite these headwinds, announcements around potential anti-dumping duties provided some relief for domestic manufacturers, protecting them from low-cost imports and supporting near-term margins. Meanwhile, the broader global trade landscape remains dynamic, with impending tariff hikes from the US scheduled from August 2025, unless key trade negotiations conclude successfully. However, India appears relatively better positioned compared to other Asia-Pacific economies, due to recent strategic agreements such as the UK-India FTA and ongoing EU trade talks, which could favour long-term export momentum.
On the operational front, the sector saw modest signs of margin recovery in Q1FY26, supported by improved volumes, favourable product mix, and backward integration benefits. Domestic demand trends have begun stabilising, while global customers continue to diversify their supply chains away from China—enhancing India’s role in the specialty chemicals space. Government support through safeguard duties and production-linked incentives (PLI) further reinforces the sector’s growth trajectory. On the pricing side, refrigerant gases remained firm due to increased demand from domestic and Middle Eastern markets, while chemicals like Acetone, Aniline, and Methanol saw monthly price declines of 10%, 9%, and 4% respectively, due to weak downstream demand. In contrast, Caustic Soda prices rose ~9% MoM, and select non-bulk industrial chemicals like Ethyl Acetate and Phenol remained stable.
Overall, the chemicals sector is navigating near-term volatility with cautious optimism. The combination of domestic policy support, strengthening export competitiveness, and strategic capacity expansion positions the industry well for medium- to long-term growth. While margin recovery is likely to continue in FY26, global risks and pricing volatility may continue to weigh on near-term performance.
Banking/Finance:
The Indian banking sector enters the second half of 2025 with a tone of cautious optimism, navigating a shifting macroeconomic environment shaped by softening interest rates, evolving credit demand, and growing digital transformation. While the momentum in credit expansion has moderated in recent months, the sector remains fundamentally strong, supported by improved asset quality, a healthy capital position, and steady deposit growth. The competitive landscape continues to evolve, with public and private banks adapting rapidly to changing customer behaviour, regulatory expectations, and technological disruption.
Monetary policy has played a pivotal role in shaping the current banking environment. The Reserve Bank of India (RBI) has eased policy rates to support growth amid global slowdown concerns, resulting in improved banking system liquidity. The recent reductions in both the repo rate and the Cash Reserve Ratio (CRR) have significantly boosted surplus liquidity, easing short-term borrowing costs and fuelling optimism across the financial sector. However, this abundant liquidity has compressed Net Interest Margins (NIMs), prompting banks to focus on enhancing fee-based income and optimising cost structures. Despite this, the broader sentiment remains positive, with expectations of a gradual pick-up in credit demand during the second half of the fiscal year.
Credit growth has witnessed a mild slowdown, with system-wide advances growing at a more measured pace compared to FY24. This moderation stems from a combination of high base effects, cautious borrower sentiment, and tightening in select retail lending segments. However, signs of a rebound are visible, supported by improving rural consumption, ongoing public infrastructure investments, and a gradual recovery in private capex. The RBI and industry forecasts suggest credit growth may stabilise around 12% by the end of FY26, with a revival in both retail and corporate loan demand expected to lead the uptick. On the liabilities side, deposit growth has remained robust and well-aligned with credit trends, ensuring adequate funding for future expansion.
The most reassuring trend for the sector has been the continued improvement in asset quality. Gross NPAs for scheduled commercial banks declined to a multi-year low of 2.3% in March 2025, with the central bank projecting only a marginal rise to 2.5% by March 2027, even under conservative stress scenarios. This reflects enhanced risk management practices, disciplined underwriting, and targeted recovery efforts. That said, the unsecured retail loan segment has shown early signs of stress and remains a segment under increased regulatory scrutiny. Overall, banks appear far better equipped today to handle cyclical asset quality risks than in the past decade.
In terms of competition, smaller public sector banks have seen strong valuation re-rating, benefiting from focused lending strategies, improving operational metrics, and relatively low base effects. The traditional divide between public and private banks continues to narrow, especially in areas like digital service delivery, turnaround times, and customer experience. The digitalisation wave has accelerated, with banks ramping up their investments in AI, data analytics, and cloud-native platforms to drive scale, efficiency, and hyper-personalisation. Unified Payments Interface (UPI) usage continues to surge, while digital lending platforms and embedded finance solutions gain traction across consumer and MSME segments. Meanwhile, the entry of fintechs and neobanks has intensified competition, compelling incumbent players to innovate faster and prioritise digital security as cyber risk emerges as a key concern.
Looking ahead, the Indian banking sector appears well-positioned to support the economy’s evolving credit needs. The macro backdrop of lower interest rates, stable inflation, and resilient financial system fundamentals provides a supportive environment. The key challenge will be balancing growth aspirations with risk discipline, especially in the context of global uncertainties and evolving borrower behaviour. Banks that can seamlessly integrate technology, maintain high service quality, and preserve asset quality are likely to emerge as long-term winners. With strong capital buffers, improved governance, and growing digital capabilities, the sector is poised to play a central role in driving India’s economic expansion through FY26 and beyond.
Important events & updates
A few important events of the last month and upcoming ones are as below:
- India’s HSBC/S&P Global Manufacturing PMI climbed to 58.4 in June, marking a 14-month high and up from 57.6 in May. This surge was driven by robust domestic and export demand, expansion in output, new orders, and record-high employment in the manufacturing sector.
- May 2025 IIP growth slowed to 1.2% YoY, the weakest in nine months, primarily due to deceleration in manufacturing and mining output.
- May 2025 CPI fell to 2.82%, a multi-year low, with food inflation at just 0.99%. June data is pending (due ~July 14), but early estimates project further easing to around 2.6%, aided by a favourable base and soft food prices.
- The composite PMI, covering manufacturing and services, also reached a 14-month high at 61.0 in June (up from 59.3 in May), reflecting strong overall business activity and export-led momentum.
- The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 58.8 in May to 60.4 in June, driven by sharp upturn in new business orders.
Fundamental outlook:
India continues to shine as a resilient economic performer amid a backdrop of slowing global growth. For the fiscal year 2025–26, India is projected to retain its position as the world’s fastest-growing major economy, with GDP growth estimates ranging from 6.2% to 6.8%. The Reserve Bank of India (RBI) expects the economy to grow by 6.5%, a forecast echoed by multilateral institutions like the International Monetary Fund (IMF), which pegs growth at 6.2%. This solid performance is underpinned by strong domestic consumption, rising government capital expenditure, and a flourishing services sector, which together continue to drive the country’s economic engine.
Inflation has seen a meaningful softening, offering relief to both policymakers and markets. The Consumer Price Index (CPI) dropped to 2.82% in May 2025—the lowest reading since February 2019—largely due to a sharp decline in food inflation. Early projections for June suggest a further decline to around 2.5%–2.6%, supported by a favourable base and ongoing deflation in key food categories such as vegetables and pulses. In light of these developments, the RBI revised its inflation forecast for FY26 to 3.7%, well within its comfort range. This moderation in inflation has allowed the Monetary Policy Committee to adopt a more accommodative stance, including a repo rate cut to 5.5% in June, which is expected to ease financial conditions and spur credit growth in the coming quarters.
On the fiscal front, the government has reiterated its commitment to consolidation, targeting a fiscal deficit of 4.4% of GDP for FY26, lower than the previous year. Despite maintaining a strong focus on infrastructure and capital expenditure, this disciplined approach reflects robust revenue generation, particularly through sustained Goods and Services Tax (GST) collections. This prudent fiscal positioning is likely to be viewed favourably by global investors and credit rating agencies.
Corporate earnings are expected to witness moderate but steady growth. CRISIL forecasts revenue growth in the range of 7–8% for FY26, led by stable consumption trends and a benign commodity price environment. While the first quarter earnings season may reflect a subdued start due to a high base and sector-specific headwinds, the broader profitability outlook remains positive, supported by margin recovery and improved operating leverage.
Institutional flows into Indian equities have remained dynamic. Foreign Institutional Investors (FIIs) displayed mixed sentiment in early July, initially registering some outflows but turning net buyers as of July 10. Their cautious optimism is visible in their hedged positions in the derivatives segment. On the other hand, Domestic Institutional Investors (DIIs) have continued their consistent buying streak, providing a critical support base to the market during periods of global volatility.
In summary, India’s fundamental economic backdrop remains robust. With growth holding steady, inflation well-anchored, fiscal prudence in play, and corporate earnings expected to gradually recover, the outlook for the Indian economy in FY26 is constructive. While external headwinds such as global slowdown risks and geopolitical tensions persist, India is well-positioned to navigate these challenges and maintain its growth leadership among large economies.
Technical outlook.
The Indian equity markets are currently navigating a phase of short-term consolidation within a broader long-term uptrend. The Volatility Index (India VIX) is hovering between 14.50 and 15.00, indicating a moderate level of caution among market participants. While this is not a sign of panic, it reflects a baseline expectation of choppy or range-bound trading ahead. A drop in the VIX below 13 would indicate rising complacency and could fuel a low-volatility breakout, while a spike above 17 would be a red flag for increased volatility or correction.
Futures and Options (F&O) data reinforces the current consolidation pattern. The highest concentration of Call Open Interest is visible at the 25,500–25,600 strike prices, which is likely to act as a strong near-term resistance zone. On the downside, heavy Put writing at the 25,000 and 24,800 strikes suggests strong support and trader confidence in downside protection. This sets the stage for a consolidation band between 24,800 and 25,600 as the primary range for July. The broader structure, however, reveals that major resistance lies at 26,000, while the major support sits lower at 24,200, offering a more extended view of the potential trading band. The Put-Call Ratio (PCR), currently at 1.15, points to a neutral to slightly positive sentiment—suggesting that market participants are comfortable selling puts and are not positioning aggressively for downside moves.
Price and volume trends from recent sessions offer further insights. Intraday activity shows signs of distribution near the 25,450–25,500 zone, with selling pressure emerging at higher levels. Conversely, the 25,200–25,250 range has seen consistent buying interest, reinforcing it as a strong demand zone. The Volume-Weighted Average Price (VWAP) has been a reliable intraday pivot, and Nifty’s close below the VWAP on July 10 indicates some intraday weakness, though not enough to confirm a trend reversal.
Looking ahead, the technical outlook for July suggests a continuation of range-bound trading with a mild bullish bias. A confirmed breakout will require a decisive close above 25,650, accompanied by a dip in the VIX below 13, potentially opening the path to test the 26,000 level. On the other hand, a breach of 24,800 would be the first sign of weakness, but a sustained move below 24,200 would be needed to confirm a deeper corrective phase. Until either of these boundaries is convincingly broken, the market is likely to remain stuck in a sideways pattern.
Outlook for the Global Market
US Market:
The US economy is entering the second half of 2025 with a mixed macro setup. After a 0.5% GDP contraction in Q1 2025—largely driven by rising imports and softer government spending—growth projections for the full year remain modest, with estimates around 1.4%. While the economy has slowed from its Q4 2024 pace, underlying momentum from consumer spending and private investment continues to support a positive, if cautious, outlook.
Inflation is showing signs of easing, but not yet fully back to the Federal Reserve’s 2% comfort zone. Headline CPI rose just 0.1% in May, with the year-on-year figure at 2.4%, while core CPI remains slightly elevated at 2.8%. The PCE index, the Fed’s preferred gauge, is tracking higher—core PCE was at 3.5% in Q1—keeping policymakers alert to risks from fresh tariff threats, which could reignite price pressures.
Despite these macro cross-currents, the labor market continues to hold firm. June saw 147,000 new jobs added, and unemployment dipped to 4.1%, reflecting persistent strength in sectors like healthcare and government. Jobless claims also remain in a healthy range, underscoring labour resilience amid a softening growth environment.
Monetary policy remains steady for now. The Fed kept rates unchanged at 4.25–4.50% in June, but recent projections signal the likelihood of two rate cuts before year-end. This pivot is tied to easing inflation and a need to cushion against slowing growth, with markets increasingly pricing in a cut in the coming meetings. However, mortgage rates have ticked up again in July to 6.72%, reversing a brief decline and keeping housing affordability under pressure.
On the market front, Q2 2025 delivered a sharp rebound. The S&P 500 rallied nearly 11%, marking a new all-time high. Gains were broad-based, with IT (up 24%), Communication Services, Industrials, and Financials all contributing. Corporate earnings are also supportive, with Q2 EPS growth expected at ~5% and revenues up 4.2%, led by strong results in tech and media.
Investor sentiment has clearly turned risk-on, helped by a subdued VIX and renewed appetite for high-beta stocks. That said, trade policy uncertainty—especially around the potential reimplementation of suspended tariffs—remains a key overhang.
Outlook for Gold
Gold has entered a consolidation phase in July 2025, with spot prices hovering around $3,324/oz after a stellar year-to-date rally of 28%. In the Indian market, 24K gold is priced near ₹98,670 per 10g. While prices have cooled from the April peak of ~$3,500/oz, underlying bullish drivers remain intact.
Central banks—especially China—continue to accumulate gold, reinforcing a strong price floor above $3,000/oz. Simultaneously, geopolitical risks and new US tariffs have sustained gold’s safe-haven appeal. ETF inflows have picked up sharply in both global and Indian markets, reflecting renewed investor interest, while physical demand trends remain mixed due to elevated prices.
The US Fed’s signal of potential rate cuts later in 2025, despite strong jobs data, keeps the monetary backdrop favourable for gold. A weaker dollar and lower real yields would further support price gains.
Looking ahead, consensus forecasts remain bullish. Price targets range from $3,500 to $3,880/oz by end-2025, with some upside risk in case of a US recession or worsening global tensions. While short-term pullbacks are likely, the broader uptrend appears well-supported by macro, policy, and sentiment tailwinds.
What should Investors do?
The Q1FY26 earnings season is underway amid a complex backdrop shaped by recent geopolitical tensions, fluctuations in global crude oil prices, interest rate easing, and short-term disruptions from unseasonal rainfall and supply chain issues. While these factors have created pockets of uncertainty, improving domestic liquidity conditions are providing some stability to market sentiment.
Earnings expectations for the quarter remain modest, with the Nifty 50 projected to deliver a year-on-year revenue and EBITDA growth of 3.9%, and a 3% increase in net profits. Excluding exceptional outliers, profit growth is estimated at 4.3% YoY, indicating a mildly positive trend. Although the broader demand recovery may take a couple more quarters to fully materialise, the overall pace of earnings downgrades appears to be slowing, with potential upgrades likely to emerge in the second half of the fiscal year.
India’s macroeconomic framework remains relatively robust, with easing inflation and accommodative monetary policy creating a constructive environment for long-term investors. Despite ongoing global headwinds, the domestic economy is showing signs of resilience, and key indicators point towards a stronger FY26 compared to the previous year.
Given this backdrop, we advise investors to stay invested in high-quality companies with strong fundamentals and consistent earnings performance. Short-term volatility should not prompt reactive decisions; instead, market dips near technical support levels should be viewed as opportunities to increase exposure gradually. For new entrants, a measured and staggered investment strategy is recommended, allowing room to navigate any near-term fluctuations.
In summary, while the market may remain range-bound in the immediate term, supportive domestic conditions and a stabilising earnings cycle set the stage for steady upside over the medium to long term. A disciplined, fundamentals-driven approach remains key to navigating the current environment.
Disclaimer:
This article should not be construed as investment advice, please consult your Investment Adviser before making any sound investment decision.
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