By Research desk
October 2025 Market Performance Recap:
Indian equities delivered a strong rebound in October 2025, marking their best monthly performance in seven months. The Nifty 50 and Sensex gained 4.51% and 4.6% respectively, representing a decisive reversal from three consecutive months of selling pressure between July and September. Broader market segments also participated in the recovery, with the Nifty Midcap 100 advancing 5.83%, the Nifty Microcap 250 rising 3.93%, and the Nifty Smallcap 250 gaining 3.72%. Market breadth was exceptionally strong, with 39 out of 50 Nifty constituents advancing—significantly improved from September’s 26:24 split—reflecting genuine broad-based participation rather than narrow leadership.
The October rally was underpinned by multiple tailwinds that aligned across domestic policy, corporate earnings, and global capital flows. The GST 2.0 implementation proved particularly potent, unleashing unprecedented festive demand in the automobile sector, which recorded its highest-ever monthly sales of 40.53 lakh units—up 41% year-on-year—driven by price cuts and improved affordability. Q2 FY26 earnings delivered a solid beat, with India Inc posting 14% year-on-year earnings growth led by oil & gas (up nine-fold for OMCs), technology, cement, capital goods, and metals sectors, collectively contributing 86% of total earnings growth. For the Nifty 50 specifically, earnings of 27 reporting companies rose 5% year-on-year, driven primarily by HDFC Bank, Reliance Industries, TCS, JSW Steel, and Infosys, which accounted for 122% of incremental growth. Critically, foreign portfolio investors (FPIs) reversed their three-month selling streak, turning net buyers of ₹14,610 crore ($1.65 billion) in October—their first month of inflows since June—largely concentrated in BFSI and oil & gas sectors.
Currency headwinds persisted despite the equity market recovery. The Indian rupee depreciated to 88.318 per US dollar by October end—reaching near all-time lows—representing a 1.2% decline during October and a 5.08% depreciation over one year. This weakness reflected broader capital flow dynamics rather than economic fundamentals, as FPI outflows totaled approximately $16 billion cumulatively from January through late October despite robust domestic indicators including 7.8% GDP growth, inflation well below the RBI’s 4% target, and $700 billion in forex reserves. The rupee’s depreciation was the most pronounced among Asian peers year-to-date, though it provided some offset to trade headwinds by improving India’s relative price competitiveness in export-driven sectors.
Overall, October represented a decisive inflection point for Indian equity markets. After months of external uncertainty stemming from US tariffs, global monetary policy debates, and large-scale FPI selling, the month demonstrated that domestic fundamentals—improved corporate earnings, policy tailwinds from GST reforms, and strong consumption signals from auto and real estate—could sustain market momentum independent of global sentiment. Market valuations at 21.40x FY26 earnings remain close to long-term averages, leaving scope for expansion contingent on sustained earnings growth and stabilization of capital flows.
Sectoral performance
In October 2025, markets saw a sharp shift from defensives to cyclicals as sentiment rebounded after three months of weakness. Real Estate led the rally (+7%) on rate-cut hopes, festive housing demand, and value buying. Banking & Financials gained strongly (Bank Nifty +5.1%, PSU +4.0%) on robust Q2 results, improved asset quality, and optimism over higher FII limits. Automobiles surged 4.5% amid record festive sales (up 41% YoY), boosted by GST 2.0 cuts and strong rural demand. IT rebounded 5.1% after steep YTD declines, supported by stable earnings and easing trade concerns, while Pharma rose 3% on tariff relief hopes. In contrast, FMCG (+2.7%) and Media (+1.5%) underperformed on muted consumption and rich valuations. Metals added 2.5%, consolidating near record highs.
Overall, October marked a decisive pivot toward growth and value sectors—led by real estate, banking, autos, and metals—signalling renewed confidence in India’s domestic demand strength heading into FY26-end.
In the following sections, we provide a more comprehensive examination, outlook and detailed insights of some major sectors:
Auto:
The Indian automobile industry delivered a strong performance in October 2025, with total dispatches rising 12.5% year-on-year (YoY) to about 26 lakh units, supported by festive demand during Diwali and Dussehra, alongside benefits from recent GST and tax restructuring measures. On a month-on-month (MoM) basis, volumes were largely stable, up 0.4%, as robust passenger vehicle (PV) sales helped offset softness in two-wheelers.
The PV segment remained the key growth driver, expanding 17.9% YoY and over 24% sequentially, led by festive promotions, tax relief, and increased first-time buyer participation. Discounts and incentives from automakers boosted festive sales, while demand in the electric vehicle category continued to gain traction. Although current momentum is strong, some moderation is expected in the coming months as the pace of retail and wholesale growth normalises from elevated levels.
In contrast, the two-wheeler segment showed subdued trends, with dispatches up only 0.2% YoY but down 2.8% MoM. Premium motorcycles outperformed, supported by refreshed line-ups and improving retail sentiment, though lower rural demand and production adjustments after the festive build-up weighed on overall wholesale numbers.
The commercial vehicle (CV) category posted healthy growth, with domestic volumes up 12% YoY and 6.4% MoM, driven by higher goods movement during the festive season, steady economic activity, and ongoing infrastructure development. Export volumes were slightly volatile but remained higher on an annual basis.
The tractor segment also witnessed solid momentum, rising 10.3% YoY and 9.4% MoM, supported by festive demand, healthy rural liquidity, and improved farm cash flows. Exports surged over 40% YoY, reflecting recovery in key international markets.
Overall, the industry outlook remains constructive, underpinned by strong retail offtake, normalising supply chains, and policy-driven support. The upcoming wedding and rabi seasons are expected to sustain momentum, though sequential growth may moderate after the festive surge.
Hospitality:
India’s hospitality sector continued its strong momentum in October 2025, supported by festive season travel, improving corporate activity, and a sustained domestic tourism boom. Despite heavy rainfall in several regions, leisure and business travel remained resilient, driving a notable improvement in average daily rates (ADR). Based on data from over 170 hotels across eight major cities, ADRs rose 10.5% year-on-year (YoY) in the lower price segment and 7.3% YoY in the higher range, while month-on-month (MoM) gains stood at 11% and 18% respectively. Mumbai and Goa led the performance charts during the month.
The sector’s strength was further underpinned by steady occupancy levels and robust room pricing. From January to August 2025, branded hotels witnessed a 10.7% YoY increase in revenue per available room (RevPAR), with ADRs rising nearly 9% year-to-date. Average nationwide occupancy hovered between 62–64%, with room rates averaging ₹8,100–8,300. Key metro markets such as Mumbai, Bengaluru, Delhi, Gurugram, Chennai, and Hyderabad continued to record double-digit growth in room rates, even as occupancy remained stable—reflecting sustained demand from business travel and meetings, incentives, conferences, and exhibitions (MICE).
On the supply front, hotel signings and additions remained healthy, with major chains expanding their portfolios through management contracts and licensing agreements. The strong pipeline indicates confidence in medium-term demand growth.
Looking ahead, the sector outlook remains upbeat. The onset of the wedding season post-Diwali, limited new supply, and a rise in foreign tourist arrivals (FTA) are expected to keep both occupancy and pricing buoyant. Additionally, challenges in outbound travel—such as visa delays and higher rejection rates—are likely to further support domestic tourism. Overall, the hospitality industry is well-positioned for sustained revenue and earnings growth in FY26, backed by a favourable demand-supply dynamic and continued strength across leisure and business travel segments.
Metals:
The metal sector remained under pressure in October 2025, weighed down by declining steel prices and rising input costs. Domestic steel prices slipped 3% month-on-month (MoM) to around ₹47,000 per tonne, while Chinese steel prices eased 2% MoM to $460 per tonne amid swelling inventories and weak demand from the construction segment. India’s steel output contracted by 3.5% MoM to 13.6 million tonnes, while China’s production fell 5% MoM to 74 million tonnes due to output restrictions and poor mill margins. Despite lower production, Chinese steel exports rose 10% MoM to 10.4 million tonnes, reflecting continued softness in local consumption.
Raw material costs trended upward through the month. Iron ore prices increased 2% MoM domestically and 4% globally, while coking coal rose 6% MoM to $174 per tonne on the back of active Chinese procurement. Manganese prices also firmed 6% MoM.
In the non-ferrous space, supply disruptions and healthy industrial demand supported price gains—Aluminium advanced 7% MoM to $2,879 per tonne, Copper climbed 6% MoM to $10,888 per tonne as inventories on the LME declined 6%, and Zinc appreciated 4% MoM to $3,141 per tonne amid lower stockpiles.
On the domestic front, prolonged monsoon conditions slowed construction activity, keeping end-user demand weak even as capacity additions continued. This supply-demand imbalance dragged steel prices to their lowest levels in ten months, now below import parity. With input costs firming and valuations already rich, near-term margin pressure appears likely.
Banking/Finance:
The BFSI space entered November on strong footing after an outstanding October, when banking indices touched record highs. The Nifty Bank rose 5.1%, while the PSU Bank index surged nearly 9%, supported by robust Q2 FY26 results, improving asset quality, and a sharp turnaround in foreign portfolio inflows of ₹14,610 crore. State-owned banks collectively reported record quarterly profits of ₹49,456 crore, marking a 9% year-on-year (YoY) rise, alongside continued NPA improvement.
The Reserve Bank of India’s phased 100 bps CRR reduction, scheduled to conclude by end-November, is set to inject around ₹2.5 lakh crore of durable liquidity into the banking system. This liquidity infusion is expected to ease funding pressures, support deposit growth, and aid credit expansion, particularly across retail, agriculture, and MSME segments. The timing aligns well with post-festive credit demand, likely boosting loan disbursals through the December quarter.
Signs of stabilization are emerging in deposit and margin dynamics. The average cost of new rupee deposits rose slightly to 5.60% in September, suggesting deposit rate normalization. With most banks having already repriced their loan books, net interest margins (NIMs) are expected to stabilise gradually through H2 FY26. While NIM pressure may persist in the short term, margin recovery is expected by Q4 FY26 as funding costs align.
Credit expansion remains broad-based, led by the retail and housing segments. Strong festive auto sales and rising housing sentiment have supported retail credit growth. Public sector banks’ advances rose 11.7% YoY in Q2, with overall credit-deposit ratios still leaving room for further expansion. Mortgage demand continues to rise, and with India’s home loan penetration at just 11% of GDP, the long-term opportunity in housing finance remains substantial.
Speculation over higher FII investment limits in PSU banks (from 20% to 49%) has lifted investor sentiment and contributed to the recent rally. Combined with strong earnings and improving capital efficiency, PSU banks remain key beneficiaries of this momentum.
Despite the strong structural setup, earnings growth could moderate over the next two quarters as NIM compression and unsecured retail stress weigh on profitability, especially for mid-sized private banks. Implementation of the RBI’s new Expected Credit Loss (ECL) framework in FY27 may further impact medium-term earnings.
Technically, the Nifty Bank index appears set for range-bound consolidation between 57,000–59,000 after recent highs. Support levels remain firm, with a breakout above 58,600 potentially paving the way for new record highs.
Overall, the sector outlook remains constructive, supported by robust liquidity conditions, healthy credit demand, and improving asset quality. However, near-term performance may stay selective, favouring banks with strong liability franchises, prudent risk controls, and consistent profitability.
Important events & updates
A few important events of the last month and upcoming ones are as below:
- India’s manufacturing PMI rose to 59.2 in October 2025, the fastest in five years, driven by strong domestic demand and GST optimism, though export growth moderated slightly.
- India’s Composite PMI eased to 60.4 in October 2025 from 61.0 in September, marking a five-month low. While both manufacturing and services expanded strongly, momentum softened due to slower services growth, even as factory output and new orders picked up pace.
- India’s Services PMI slipped to 58.9 in October 2025 from 60.9 in September, marking the slowest expansion since May. Growth eased as new business rose at a five-month low amid stiff competition and weather-related disruptions.
- India’s industrial output rose 4% YoY in September 2025, matching August’s revised 4.1% growth and surpassing expectations of 2.6%.
- Gross GST revenue for October 2025 reached ₹1,95,936 crores, up 4.6% year-on-year from ₹1,87,346 crores in October 2024.
Fundamental outlook:
India’s economic momentum remains resilient, supported by strong investment activity and easing inflationary pressures. Real GDP grew 7.8% year-on-year in Q1 FY26, marking the fastest expansion in five quarters and comfortably exceeding the RBI’s 6.5% estimate. Growth was broad-based, led by services (9.3%) and manufacturing (7.7%), while agriculture expanded 3.7%. Investment demand continues to drive activity with GFCF up 9.4% in Q4 FY25, while government consumption rebounded 7.4% after a period of fiscal restraint. However, nominal GDP growth of 8.8%—well below the 10.1% assumption—creates fiscal arithmetic challenges for the second half.
On the policy front, the RBI has delivered 100 bps of cumulative repo rate cuts since February 2024 and lowered CRR to 3%, injecting over ₹2.5 lakh crore in liquidity. Fiscal spending remains front-loaded, with capex surging 43% year-on-year in April–September FY26, though weak revenue receipts and subdued tax growth pose near-term fiscal risks. The GST 2.0 reform, effective September 2025, has simplified the rate structure and spurred consumption, reflected in record auto retail sales and resilient GST collections.
Inflation has collapsed to a series low of 0.48% in October, largely due to sustained food deflation and GST-driven price moderation. This benign inflation backdrop has opened further monetary policy space, with a 25 bps rate cut in December now widely expected. However, the widening nominal–real growth gap and potential tariff-related disruptions from the US remain key risks to both fiscal consolidation and private investment recovery.
On external dynamics, the rupee weakened marginally to 88.32 per USD in October, though FPI inflows of ₹14,610 crore reversed a three-month outflow trend, driven by renewed interest in BFSI stocks. DII inflows of over ₹6.2 lakh crore year-to-date continue to cushion volatility. Overall, India’s macro environment remains constructive, underpinned by policy support, moderating inflation, and stable domestic demand, with FY26 growth expected in the 6.5–6.8% range.
Technical outlook.
The Nifty 50 trades at 25,492 (as of November 10, 2025), consolidating after a 4.5% October gain. The index currently lies below its 100-day EMA (25,771) but above its 200-day EMA (24,375), maintaining a strong long-term uptrend while short-term momentum has softened. RSI (14) at 49.16 indicates neutral sentiment, MACD remains positive, and stochastic levels point to a stable consolidation phase.
High-frequency indicators point to sustained, though moderating, momentum. India’s manufacturing PMI rose to 59.2 in October—the fastest in five years—on robust domestic demand and GST optimism. The services PMI eased to 58.9 from 60.9, showing slower expansion amid competitive pressures and weather disruptions, while the composite PMI moderated to 60.4 from 61.0, suggesting overall resilience but fading festive tailwinds. Industrial production grew 4% YoY in September, matching August’s pace and beating expectations, and GST collections rose 4.6% YoY in October to ₹1.96 lakh crore, confirming firm underlying activity.
The primary support for Nifty is placed at 25,200, with 24,800 as major support. On the upside, 25,700 remains the primary resistance, and 26,000 marks the major resistance. Market breadth continues to be supportive, with key moving average crossovers aligned in favour of the long-term trend.
While short-term momentum has cooled after a strong October rally, the broader technical setup remains constructive. As long as Nifty holds above 25,200, the structural uptrend stays intact, with upcoming Q2 GDP and IIP releases likely to dictate the next directional move.
Outlook for the Global Market
US Market:
The US market entered November 2025 on a mixed note, balancing steady economic growth with rising signs of fatigue at stretched valuations. The economy remains resilient, with Q3 GDP growth estimated at 2.7% annualised, supported by firm private consumption and healthy business investment. However, job creation has slowed to around 58,000 per month compared to more than 100,000 earlier in the year, while the unemployment rate has inched up to 4.3%. Inflation stayed elevated at 3% year-on-year, though much of the uptick stems from tariffs and energy costs rather than underlying price pressures. With consumer inflation expectations easing and core inflation stable, the Federal Reserve retains scope for further policy easing after two consecutive 25 bps rate cuts in September and October, though its tone remains cautious ahead of the December meeting.
US equities touched record highs in late October, with the S&P 500 up 14% year-to-date and the Nasdaq up 19%, driven primarily by AI-led optimism and mega-cap tech strength. Yet, the rally has grown increasingly narrow and concentrated, with Nvidia alone accounting for nearly 8% of the S&P 500’s total market value. Recent volatility reflects growing unease over inflated AI valuations, ballooning losses among leading firms, and reports of circular financing within the sector. Warnings from major global institutions about a potential 10–20% correction have further tempered sentiment. Elevated valuation metrics, including the Buffett indicator and Shiller CAPE ratio, reinforce the need for caution as markets digest slowing employment momentum and a still-restrictive monetary backdrop.
Heading into the year’s final stretch, the outlook for US equities remains finely balanced. The market’s direction hinges on three pivotal developments — the Fed’s December policy decision, the upcoming Q3 GDP release, and corporate earnings guidance for 2026. A continued easing bias from the Fed and resilient earnings could support a year-end rally, while any hawkish surprise or weak data may trigger deeper correction. For investors, this environment favours a more tactical stance — reducing exposure to overvalued AI-heavy names, rotating into defensives such as healthcare and consumer staples, and maintaining flexibility amid higher volatility and policy uncertainty through the remainder of 2025.
Outlook for Gold
Gold prices in India have eased in early November after reaching historic highs in October, reflecting both a correction in global prices and a mild rupee appreciation. The metal, which had surged to record levels in October, has since retreated by around 8%, marking a phase of healthy consolidation within its broader uptrend. Despite this, gold remains one of the strongest-performing assets of 2025 in rupee terms, supported by a combination of global monetary easing expectations, safe-haven demand, and the rupee’s relative weakness.
The rupee’s movement continues to play a pivotal role in shaping domestic gold dynamics. Its earlier depreciation had amplified gold’s local gains, while its recent appreciation has moderated the rally. Nevertheless, the currency remains near all-time lows, underscoring gold’s value as an effective hedge against rupee weakness and global uncertainty. Strong institutional buying—evident from record inflows into gold ETFs and steady additions by the Reserve Bank of India—reflects sustained confidence in gold’s role as a long-term store of value and portfolio stabiliser.
Retail demand has been subdued due to high price levels, with jewellery purchases declining notably in recent months. However, with wedding season, steady price consolidation is likely to encourage a gradual pickup in physical demand.
What should Investors do?
Indian equities witnessed a measured consolidation through early November following a strong rally in the previous month. The Nifty 50 saw a retracement of around 600 points over the last ten sessions, effectively cooling off overbought conditions after a 1,500-point surge. The index closed at 25,492.30 on November 7, 2025, finding key support in the 25,500–25,300 region, aligned with its 50-day exponential moving average near 25,325. Bank Nifty mirrored this consolidation, stabilising between 57,300 and 58,500 after recently hitting an all-time high, suggesting a base-building phase rather than a structural reversal.
From a broader market perspective, domestic institutional participation continues to act as a powerful stabilising force. DIIs now hold a record 18.26% of NSE-listed equities, while FII ownership has slipped to a 13-year low of 16.71%, reinforcing the “domestic cushion” narrative. Robust SIP inflows, healthy retail participation, and renewed FII buying in early November signal improving sentiment. The economic environment remains constructive with policy support, festive demand, and early signs of earnings recovery underpinning market resilience.
Sectorally, momentum remains tilted towards cyclical and policy-linked segments. PSU banking and financials continue to benefit from healthy balance sheets and rising credit growth, while the auto space enjoys festive season tailwinds and easing input costs. Consumer staples and durables show steady demand resilience amid profit-taking. Defence and capital goods retain strong structural backing from indigenisation efforts and higher government spending. Meanwhile, IT and metals are undergoing phase-wise consolidation, offering selective accumulation opportunities.
In summary, the recent correction offers a healthy breather within an ongoing uptrend. Investors may use this phase to gradually accumulate quality large-cap names in sectors with strong policy and earnings visibility. While near-term volatility driven by global cues and profit-booking may persist, the medium-term structure remains favourable. Hence, the stance for November 2025 is one of cautious optimism—constructive on India’s growth trajectory but selective and disciplined in deployment.
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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