Dear Investors,
The market was volatile in June 2025 due to the Israel Iran turmoil but bounced back after ceasefire was announced. The Sensex closed the month of June 2025 up 2.6%, while the Nifty closed above the psychologically important 25,000 level. FII flows continued to be robust with nearly Rs 14,500 crores of net purchase in June. DIIs flows continued to be strong with Rs 49,000 crores of net purchases. The broader market outperformed Nifty, with Nifty 500 gaining 3.6%. Small caps rose 5.8% in May. Among the sectors, Telecom, Healthcare, Consumer Durables, Realty, Finance, Metals, Oil & Gas, Consumer Discretionary etc. FMCG, Banking, Auto etc underperformed.
S&P 500 rose by 5%, while NASDAQ rallied nearly 6%. Hang Seng and Nikkei rose by 4.27% and 6.71%. FTSE was flat, while DAX and CAC was down in June 2025. Volatility was lower in month of June and the market sentiment seems bullish based on mechanical indicators. Geopolitical uncertainty is the biggest risk factor for global markets. President Trump has set a deadline of 9th July for the tariff pause announced in April. With the deadline looming in the next few days, trade talks with different countries are in various stages of negotiations. US and China have an agreement on a trade framework with both sides agreeing to rollback restrictive measures. But various prickly issues have to be worked out with both countries. Similarly, Japan and EU have major disagreements with the US with regards to tariffs on certain US exports. India’s trade talks with the US are in the final stages of negotiations, but there are disagreements over agricultural exports with the US. However, both countries are hopeful that an agreement can be reached.
Treasury bond yields fell in the United States despite the geo-political tensions in the Middle East. The gap between the 10-year US Treasury Bond yield and the 10-year G-Sec yield in India narrowed to 1.88%. This may have an impact on FII flows into Indian Government Bond market. The 10-year G-Sec yield firmed up by 11 bps, but short-term yields declined further in the month of June. The steepening of the yield curve, bull steepening, is favourable for shorter duration debt funds. Precious metals remained firm in June with Gold prices rising 0.9%. Gold prices are likely to rise further since central banks around the world continue to purchase gold.
Despite the short-term headwinds India will continue to be the fastest growing economy in FY 2026 with projected GDP growth rate of 6.5%. The impact of trade wars on Indian economic growth will be relatively less compared to export-oriented economy like China. The rally in the market, especially in small caps has resulted in valuations going up. While the valuations are still reasonable (lower than long term historical average), corporate earnings will have to provide support to the rally going forward. The Q1 corporate earnings expected in the coming weeks will provide direction to the market. Q1 FY 2025 earnings and management outlook can set the tone for the market to decisive trend or breakout from the current rangebound pattern. From a long-term perspective favourable macro driven by strong / resilient GDP growth, rising per capita income, expected surge in private sector capex spending on the back of Government spending on infrastructure, foreign investment flows in India etc make the outlook for Indian equities positive. Investors should have long investment horizon and continue to invest in a disciplined way, with focus on asset allocation and quality.
Assuring you of our best services.
Best Wishes,
Ajoy Agarwal,
(Managing Director)
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