Dear Investors,
Nifty closed the month of October 2025 above the psychologically important 25,000 level. The Sensex rose 4.6% to close the month at nearly 84,000 level. Market rally was broad based with the Nifty 500 also rising by 4.3%. Midcaps gained 4.8%, while small caps gained 3.73%. As far as industry sectors are concerned, sectors like Realty, Telecom, Oil and Gas, Banks, Financial Services Consumer Durables and IT outperformed in October, while Automobiles, Infrastructure, Power, FMCG and Capital goods underperformed. In a welcome change from the trend over the past few months, FIIs turned net buyers in October with ~Rs 14,600 crores of net purchases. Mutual funds made net purchases of Rs 20,200 crores.
The US China trade deal has boosted global risk sentiments, especially lifting the US and China markets. Indian market is expecting a trade deal between India and the US. Though the market is expecting a trade deal between India and the US, the market will be reading beyond the headlines in terms of what the trade deal means for different sectors. The market has remained resilient despite global trade headwinds. India is trying to diversify its exports base in face of changing dynamics in the Indo US trade relationship. India's exports in first half of FY 2025-26 grew by 4% despite the global headwinds.
US Federal Reserve cut federal funds rate by 25 bps in October 2025. This followed a 25 bps rate in September. The Fed has acknowledged that "downside risks" to employment (labour market) has increased. Earlier in the last week of September – first week of October 2025, the RBI held repo rate flat in its monetary policy meeting. Bond yields remained flattish with the 10-year bond yield easing by 4 bps.
Precious metals continued their unrelenting rise. Gold prices going 5% in October, while silver gaining 4.8%. With central banks continuing to buy gold and more central banks joining in the gold purchase spree, we expect precious metals to remain firm and continue their upward trend in the coming months and quarters.
Though valuations are well below peaks, valuation of Indian equities is still higher than valuation of emerging market equities. Though market sentiments were bullish, it remains to be seen whether profit booking continues at higher levels. Nifty making higher lows is a positive for the market, but earnings need to support valuations once the market approaches the all-time highs.
We are seeing rapidly shifting geopolitical dynamics and India also has to adjust to the evolving geopolitical dynamics based on realpolitik consideration. The Q2 earnings season showed marginal growth and festive season sales has been very encouraging, especially in the automobile sector which saw record sales in the Navratri to Diwali season. How this translates into revenue and earnings growth of companies in Q3 results remains to be seen.
We expect the market rangebound with profit booking at higher levels and buying support at psychologically important levels. The market will wait for global and domestic cues like RBI December MPC meeting, Fed FOMC December meeting, Indo US trade talks and Union Budget in January end to make a decisive move. While overall market sentiment remains positive, investors should be wary of irrational exuberance since valuations in certain pockets remain a concern. Investors should remain disciplined and focus on asset allocation.
Assuring you of our best services.
Best Wishes,
Ajoy Agarwal,
(Managing Director)
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