Publish Views: 247
Fairness Market Insights:
Fairness markets stay in a constructive bias until some catastrophe happens that might break the upside momentum. Policymakers are fast to course appropriate when markets throw tantrums. As we recall, the BSE Sensex corrected by 8.3% between October 2024 and March 2025. We noticed some essential components coming collectively to weigh in the marketplace sentiment throughout this time. Forward of elections, the federal government diminished spending, and the RBI tightened liquidity by Rs 3–4 lakh crore to help the rupee. This, mixed with slowing consumption, weak company earnings and international tariff considerations, led to the correction.
The latest Apr–Jun 2025 quarter introduced a welcome summer season rally for traders. The Sensex gained round 10%, with most main sectors performing well- actual property and monetary companies main the best way. What drove this uptick? Anticipated improve in company income, easing geopolitical tensions, a pause in international tariff selections, surplus liquidity and FPIs turning web patrons for the complete quarter.
Fairness markets within the US additionally hit file ranges resulting from ease of geopolitical tensions, dovish fed and commerce developments, however financial information launched in early July for Q1 2025 (Jan-Mar) presents a blended image. In Q1’25 US Economic system contracted at a price of 0.5% annual price, the primary destructive studying since Q1 2022. On the identical time, inflation within the US stays above goal (Core PCE at 2.7% in Might), making rate of interest selections difficult. The area will stay delicate to information round inflation, charges, and commerce going ahead.
What can we anticipate for Indian markets within the close to time period? India Inc’s company revenue development has been modest to date (Nifty corporations are anticipated to develop June quarter web income by 4.6% YoY). Financial and financial insurance policies selections within the type of the latest price cuts and finances tax breaks can raise family consumption, particularly within the festive season forward. Consumption already accounts for ~63% of India’s GDP, and this home power is vital to cushion the influence of world uncertainties.
We stay cautiously optimistic as supply-side pressures in fairness markets are rising once more and pose a key threat for fairness returns. General provide is up sharply. Bulk & Block offers (B&B), IPOs, Rights Points, QIPs are up 103.5% q-o-q and 10.8% y-o-y.
Elevated valuations on the again of a rebound in investor sentiment additionally make the market extra delicate to destructive surprises. Giant caps are buying and selling near their historic averages whereas mid & small caps are at 22% and 44% premiums respectively. If we see the information, massive caps have clearly been extra resilient for YTD 2025: Giant caps are up 5.2%, whereas mid-caps are practically flat, and small-caps have declined. We stay centered on staying disciplined in our strategy- backing high-quality, large-cap worth portfolios that helps managing threat and supply higher upside potential with a long-term view.
Debt Market Insights:
Price cuts are right here, what does it imply for the bond markets?
The Reserve Financial institution of India (RBI) has formally moved right into a rate-cutting cycle, delivering a complete 1% discount within the repo price since February 2025. The cuts got here in three rounds- 25 bps every in February and April, and a extra aggressive 50 bps in June. This shift clearly alerts that the inflation battle is, for now, below management. In reality, retail inflation in June hit a six-year low of two.1%, pushed largely by falling meals costs. Sturdy agricultural sowing and good reservoir ranges additionally level to a benign meals inflation outlook within the coming months. Nevertheless, we stay watchful of world dangers, significantly any recent volatility from commerce developments or oil worth shocks.
The RBI has made it clear: the precedence now’s to stimulate home consumption and personal funding. Entrance-loading price cuts are a strategic transfer to spice up financial momentum and revive the credit score cycle, which is an important transmission channel in India. Traditionally, when banks sense stronger financial momentum, they’re extra keen to lend. But when they understand dangers forward, they have an inclination to drag again, particularly in lending to NBFCs or precedence sectors like agriculture, as we noticed in 2024. With rates of interest easing and inflation subdued, monitoring home credit score tendencies within the coming months will likely be essential.
The bond market has responded rapidly to the 1 share level repo price reduce. As anticipated, short-term yields have fallen sooner than long-term ones, resulting in a steepening yield curve. This can be a traditional signal that we’re doubtless approaching the top of the rate-cut cycle, particularly with the RBI now shifting its stance from “accommodative” to “impartial”.
On this surroundings, short-duration debt funds are higher positioned than long-duration ones, as they profit extra from near-term price changes and system liquidity.
Arbitrage funds stay a beautiful possibility for short-term money administration, providing tax-efficient returns. However given their sensitivity to fairness market swings, we suggest pairing them with ultra-short-term debt funds to keep up portfolio stability and liquidity.
Different Asset Lessons:
Gold as an asset class has delivered the best returns month over month in 2025 to date, pushed by international macro and financial tailwinds. Gold Mini is up 24.3% YTD’25 and 32.11% within the final one yr.
As we’ve constantly advocated, sustaining a strategic allocation of 10 – 20% to gold can improve portfolio resilience, particularly in periods of heightened international financial uncertainty. This quarter was one other robust validation of that view.
Coming to actual property, India’s prime residential actual property markets noticed a 14% year-on-year decline in gross sales through the June quarter, largely pushed by pricing considerations. New challenge launches additionally slowed, as international geopolitical uncertainty weighed on demand. Affordability challenges are more and more straining the broader housing market. In the meantime, builders are shifting their focus towards the premium phase, which has remained extra resilient.
Nevertheless, actual property general has develop into costly. We’re advising purchasers to keep away from recent property purchases at this stage. Given components like illiquidity, cyclical tendencies, worth volatility, and prolonged holding intervals, we suggest capping actual property publicity at 20–25% of your whole portfolio.
Truemind’s Mannequin Portfolio – Present Asset Allocation
Private Finance Capsule:
Altering world order and what it is best to do?
Greed is nice or unhealthy?