Market Watch

Equity Market Overview November 2025



  • Domestic Equity Market Update

    Domestic Equity Market Update
  • Indian equities ended the month on a mixed note. Large cap-oriented BSE Sensex ended higher by 2.1% (MoM) and Nifty 50 ended higher by 1.9% (MoM). While the BSE Midcap index ended higher by 0.35%(MoM) and BSE Small cap index ended lower by 3.38% (MoM).
  • In terms of BSE sectoral indices, the sectors ended on a mixed note. IT, Bank Index and Auto were the outperformers during the month.
  • During the month, FPIs were net buyers in equities to the tune of Rs 132 bn. (Data as on 27th November). 
  • Domestic equity markets ended the month on a mixed note supported by growing expectations of interest rate cuts by both the US Federal Reserve and the RBI, optimism over a US shutdown resolution, progress on a potential US–India trade deal, solid earnings and easing inflation for October along with state election outcome that indicated policy continuity; however, profit booking at higher levels capped the gains ahead of the release of key domestic data.
  • Global Market Updates
  • US equity markets ended the month on a positive note driven by increased odds of a Fed rate cut in December and optimism about the potential end to the US government shutdown. Dovish comments from Fed officials renewed optimism about the interest rate outlook. However, these gains were capped owing to concerns about inflated tech valuations coupled with labour market weakness and stubbornly elevated inflation. 
  • European equity markets ended the month on a mixed note buoyed by growing expectations of US interest rate cuts, optimism over a resolution to the US government shutdown and progress on a plan to address geopolitical uncertainties in Europe. However, gains were capped amid worries on back of mixed earnings updates and a risk-off mood across global markets.
  • Brent oil prices corrected from USD 65.07 per barrel to USD 63.27 during the month on oversupply concerns, as forecasts continue to point to a persistent supply-demand imbalance and pressured by a stronger dollar and concerns of a global supply glut.
  • Most of the Domestic Macro data points showed a strong picture
  • As per data from the National Statistics Office (NSO), India’s Real Gross Domestic Product (GDP) rose 8.2% YoY in Q2 FY26, sharply higher than the 5.6% YoY growth recorded in Q2 FY25. Real GDP for Q2 FY26 stood at Rs 48.63 trillion, up from Rs 44.94 trillion in Q2 FY25. Nominal GDP for Q2 FY26 rose 8.7% YoY to Rs 85.25 trillion, compared with Rs 78.40 trillion a year earlier.
  • According to S&P Global Ratings, India's economy is projected to expand by 6.5% YoY in FY26 and by 6.7% YoY in FY27, with consumption expected to outpace investment as the primary driver of growth in both years, aided by lower GST rates, income tax cuts and interest rate reductions.
  • According to the IMF, India's economy is estimated to grow at 6.6% YoY in FY26, noting that the GST reforms are likely to help cushion the country from the adverse impact of the 50% tariffs imposed by the US. Under their baseline assumption of prolonged 50% US tariffs, real GDP is projected to grow moderate to 6.2% YoY in FY27. 
  • The IMF has reassigned the ‘floating’ label for the Rupee’s exchange rate arrangement, citing declining forex interventions by the central bank in recent times. In 2023, the Fund had dropped the floating tag and termed India’s de facto exchange rate policy a ‘stabilised arrangement’, indicating the central bank was intervening too much and too often in the foreign exchange market.
  • As per Moody’s Ratings, India's Gross Domestic Product (GDP) growth is projected at 7% YoY in CY25 and 6.4% YoY in CY26, supported by strong domestic demand amid global uncertainty.
  • According to RBI data, banking system credit grew 11.3% YoY in the fortnight ended October 31, 2025, slightly below the 11.5% YoY growth registered in the previous fortnight. 
  • The RBI Governor, reiterated that it was communicated at the last MPC meeting in October 2025 that there was room to cut policy rates and further said that the macroeconomic data does not indicate that the room to lower rates has decreased. The MPC cut rates by a total 100 bps in H1 CY25, but has maintained a pause since August 2025.
  • According to latest quarterly bulletin of unincorporated sector enterprises released by the National Statistics Office (NSO), around 128.6 mn people were employed in the unincorporated sector during Q2 FY26, higher than the 128.57 mn in Q1 FY26. The number of establishments in the sector rose also to 79.7 mn during Q2 FY26 from 79.42 mn in Q1 FY26.
  • According to latest quarterly bulletin of unincorporated sector enterprises released by the National Statistics Office (NSO), around 128.6 mn people were employed in the unincorporated sector during Q2 FY26, higher than the 128.57 mn in Q1 FY26. The number of establishments in the sector rose also to 79.7 mn during Q2 FY26 from 79.42 mn in Q1 FY26.
  • According to S&P Global, the HSBC Flash Composite Output Index of India fell to 59.9 in November 2025 from 60.4 in October 2025, marking a 6-month low. The Manufacturing PMI dropped from 59.2 in October 2025 to a 9-month low of 57.4 in November 2025 while the Services PMI rose to 59.5 in November 2025 from 58.9 in October 2025.
  • As per CRISIL Ratings, operating profits of Oil Marketing Companies (OMCs) are expected to surge more than 50% YoY to USD 18-20 per barrel in FY26, driven by stronger marketing margins. Crude oil prices are expected to soften to USD 65-67 per barrel, keeping gross refining margins at USD 4-6 per barrel.
  • According to ICRA, India’s electricity demand growth projection has been revised downward to 1.5-2% YoY for FY26 from 4-4.5% YoY earlier, mainly impacted by the prolonged monsoon. India's electricity demand fell by 3% YoY in the first 10 days of November 2025.
  • As per data from ICRA, India’s two-wheeler industry posted its strongest-ever monthly performance in October 2025, with retail sales rising 51.8% YoY to an all-time high of 3.15 mn units. The revised GST rates, combined with strong festive demand helped revive buying momentum sharply.
  • According to a report by ICRA, net absorption of commercial office leasing in six major cities is expected to reach a record 69–70 mn square feet (msf) in FY26. Net absorption was 66 msf in FY25. Vacancy rates are forecast to fall to 12.5–13% by March 2026 and further to 12–12.5% by March 2027.
  • As per a CRISIL report, mall operators are expected to clock healthy revenue growth of 12–14% YoY in FY26, amid the ramp-up of malls acquired over the past two fiscals, the planned addition of new malls and the standard annual escalation in rentals. Overall occupancy is expected to further improve and remain around 94–95% in FY26 and FY27 after rising 350 bps to 93.5% in FY25.
  • CareEdge Ratings has upgraded its credit growth outlook to 11.5%-12.5% YoY for FY26, up from an earlier average growth of 11.13% YoY in FY25. The Gross Non-Performing Assets (GNPA) for overall banks is expected to improve to 2.1% in FY26 from 2.3% in FY25. Credit offtake is expected to remain subdued in H2 FY26 for both Banking and Non-Banking Finance Companies (NBFCs).
  • As per CareEdge Ratings, India's Life Insurance sector continued its double-digit growth for the second month in a row, with new business premium up by 12.1% YoY touching Rs 340.07 bn.
  • As per data from the Confederation of Indian Textile Industries (CITI), US tariffs have started hurting textile and apparel exports, with almost all categories witnessing a decline. Textile exports fell 12.92% YoY while apparel exports fell 12.88% YoY during the month. 
  • As per data from the Airports Authority of India (AAI), India's international air freight traffic rose 4.1% YoY, domestic freight rose 5.9% YoY, and total freight rose by 4.8% YoY during H1 FY26. 
  • According to a report from data analytics firm NielsenIQ, sales growth in Indian FMCG sector slowed to 5.4% YoY in volume terms during Q2 FY26, mired by disruptions due to GST rate changes, though value growth jumped to 12.9% YoY.
  • According to data released by the Ministry of Commerce and Industry, the Index of Core Industries (ICI) stood at 162.4 in October 2025, unchanged from a year ago.
  • According to Prime Database, Domestic Institutional Investors’ (DIIs’) ownership in NSE-listed companies soared to a record high of 18.26% in Q2 FY26. In contrast, the share of Foreign Portfolio Investors (FPIs) slipped to a 13-year low of 16.71%, following outflows of Rs 766.19 bn during the quarter.
  • Outlook & Investment Strategy
  • Going forward, the Indian equity market is likely to be driven by any moves around the India-US trade deal, movement in the US Dollar index, improvement in consumption demand during the wedding season, FPI/DII flows, and moves to support liquidity by RBI. The Trump administration has imposed about 50% tariff on India, including penalty due to India’s trade relations with Russia which has led to volatility in sector exposed to the US. The GST rate rationalisation may act as a tailwind to the overall domestic consumption in near-term. While there is still expectations of a better trade deal that can come about, INR hit a fresh record low against the US Dollar in November 2025, pressured by uncertainty around the US trade deal. Any cuts in the Policy rates by the US and India could bolster investor sentiments for risk assets. The 8.2% YoY GDP growth in Q2 of FY26 is very encouraging. It reflects the impact of pro-growth policies and reforms.
  • With a low base, a sustained pickup in urban consumption demand, or incremental government spending support though fiscal expansion, or further meaningful support provided by the RBI, could help drive superior earnings delivery which is likely to also aid in better equity market performance. 
  • Rich valuations, selling pressure from FPIs and stock issuances in the Primary markets seem to be weighing down on the market performance. The Government on its part has rationalised GST rates to improve domestic consumption, the benefits of which is getting visible and is likely to drive medium-term growth. Market participants also expect further policy rate cuts or strong liquidity infusion by the RBI to keep growth buoyant. If further support comes about, or if US tariffs get re-negotiated, or if we get favourable tariffs with EU (negotiations ongoing), the markets are likely to take that positively. 
  • While the markets have become narrow ( i.e. lower number of stocks are generating alpha), as the earnings growth start to gain momentum, opportunities may get broad based. Stocks which deliver incrementally better revenue/earnings growth may see better performance. Fund Managers who are able to be fairly nimble and identify growth ideas could generate alpha vs their peers. While FPIs have been big sellers in the Indian markets, India’s relative underperformance vs its peers in the recent months is likely to gradually make the Indian markets attractive for them, provided the earnings downgrades reverse.
  • In terms of deployment strategy, we maintain our investment deployment strategy of 50% Lumpsum and 50% staggered over the next 5-6 months, as Indian GDP growth still remain amongst the best in the world and any sharp volatility could be used by investors to add to their exposures. Fund managers who can pick out companies with superior growth prospects are likely to outperform in the medium-term. On allocations in Equity Mutual Fund perspective, investors could look at investing across Largecap, Flexicap, Large and Midcap, Multicap, Hybrid Equity, Business Cycle funds and using STPs as an instrument to invest in and Midcap funds, Smallcap and Multi asset funds; in line with their risk profile and product suitability from a 2-3 years’ time horizon.



Debt Market Overview Nov 2025



Domestic Equity Market Update

  • Banking system liquidity as measured by the Reserve Bank of India’s (RBI) net Liquidity Adjustment Facility (LAF) stood at a daily average surplus of ~Rs 1.81 trillion in November 2025 as against a daily average surplus of ~Rs 0.86 trillion in the previous month. The call money market traded in the range of ~5.00-5.60% during the month.
  • Domestic G-sec yields closed higher in November 2025, and the 10-year benchmark, 6.33% G-Sec 2035 bond, ended at 6.55% compared to the previous month’s close of 6.53%. Prices also weakened as investors remained cautious about the potential US-India trade deal, which could influence the RBI’s policy rate decision. Losses deepened as the Rupee hit a fresh record low, eroding risk appetite and triggering a broad sell-off in the debt market. Finally, profit booking towards the end of the month due to tempered hopes of immediate policy easing on the back of stronger-than-expected GDP data also contributed to the falling prices. However, overall losses were capped as heavy purchases by the RBI during the first half had boosted market sentiment and fuelled expectations of upcoming Open Market Operations. Further, RBI governor’s dovish commentary added to the price recovery.
  • In absence of CPI data, the US Labor Department released data for the Producer Price Index for final demand which increased 0.3% MoM in September 2025, after a 0.1% MoM drop in August 2025. Economists polled by Reuters had forecast the PPI would rebound 0.3% MoM. As per a flash estimate from Eurostat, the Eurozone harmonized index of consumer prices rose 2.1% YoY in October 2025, following a 2.2% YoY rise in September 2025. Eurozone inflation softened in October largely due to the fall in energy prices while core inflation held steady at 2.4% YoY during the month. As per official data, the Euro Area economy grew at a faster pace in Q3 CY25, logging a Gross Domestic Product (GDP) growth of 0.2% QoQ, faster than the 0.1% QoQ growth seen in Q2 CY25. Data from China’s National Bureau of Statistics showed that the Consumer Price Index rose by 0.2% YoY in October 2025 against a decrease of 0.2% YoY in the previous month. This is compared with analysts’ expectations of zero, or flat YoY growth. The People's Bank of China left its benchmark interest rates unchanged for the sixth straight month in November 2025. The PBoC kept its one-year loan prime rate unchanged at 3.0%. Similarly, the five-year LPR, the benchmark for mortgage rates, was retained at 3.50%.
  • As per MoSPI data, India’s retail inflation, measured by the Consumer Price Index (CPI), cooled to 0.25% YoY in October 2025, from 1.54% YoY in September 2025, making it the lowest print in the current CPI series. Core CPI inflation eased marginally to 4.40% YoY in October 2025 as against 4.48% YoY in the previous month. India’s Wholesale Price Index (WPI) linked inflation dropped to a 27-month low of (-)1.21% YoY in October 2025, from 0.13% YoY in September 2025, aided by a 5% YoY drop in food prices. According to the data released by the Commerce Ministry, India’s exports fell by 11.8% YoY to USD 34.38 bn in October 2025. Imports, however, rose sharply by 16.63% YoY to USD 76.06 bn, widening the trade deficit to USD 41.68 bn for the month. As per the Controller General of Accounts (CGA), the government's fiscal deficit for the April-October period of FY26 widened Rs 8.25 trillion to 52.6% of the Budget Estimates (BE) compared to 46.5% of BE in the corresponding period last year as capital expenditure (capex) increased by 32% YoY. India’s GST collections in November 2025 rose marginally to Rs 1.70 trillion, up 0.7% YoY, with year-to-date collections growing 8.9%. Net GST revenue grew 1.3% to Rs 1.52 trillion. According to provisional CBDT data, India’s net direct tax collection in FY26 (till November 10, 2025) grew 7% YoY to Rs 12.92 trillion, aided by lower refunds. Net corporate tax collection rose 5.7% YoY to Rs 5.37 trillion while non-corporate tax collection increased 8.7% YoY to Rs 7.19 trillion. Securities Transaction Tax (STT) contributed Rs 356.82 bn, 0.67% YoY lower, reflecting lacklustre equity market turnover.
  • The liquidity condition, as measured by RBI’s net LAF, improved and remained in surplus. The RBI conducted both variable rate Reverse Repo (VRRR) and Variable Rate Repo (VRR) auctions during the month to actively manage the banking system liquidity. In its October 2025 MPC meeting, the RBI kept policy rates unchanged and continued with its neutral stance. The RBI also revised its inflation outlook for FY26 downward to 2.6% from 3.1% projected earlier while upwardly revising their growth projection to 6.8% from the earlier 6.5%. India’s retail inflation, measured by the Consumer Price Index (CPI), cooled to 0.25% YoY in October 2025, from 1.54% YoY in September 2025, making it the lowest YoY inflation print in the current series. Core CPI inflation eased marginally to 4.40% YoY in October 2025. Going forward, the growth-inflation dynamics will continue to determine the necessity of further policy actions by the RBI. However, the higher-than-expected Q2 FY26 GDP print has made them look at the impending December policy decision with caution. In the US, the Federal Reserve took a cautious stance, cutting rates by 25 bps in the October Policy meeting and deciding to remain data dependent for future actions. Despite the recent government shutdown, the likelihood of a Fed rate cut has gone up post the release of the latest job-related data. Going forward, future Fed decisions will continue have a bearing on bond yields in India and direct capital flows.
  • The hardening in longer dated G-secs has created attractive tactical opportunities as yields are expected to compress over time, given RBI governor’s dovish comments in a recent interview. This can benefit Dynamic bond funds which are tactically positioned to take advantage of the same. The spread at the shorter end of the Corporate Bond yield curve continues to remain at lucrative levels against G-secs and provides accrual opportunity. Thus, a case continues to exist for investment into corporate bond funds that are at the 1-4-year segment of the curve. Hence, investors can look at Corporate Bond Funds for a horizon of 15 months and above. For a horizon of 24 months and above, investors may consider Income Plus Arbitrage FoF. Investors may also consider Dynamic Bond Funds for the same horizon, but it should be used as tactical allocation. For a horizon of 3 months and above, investors can consider Arbitrage Funds and Money Market Funds. Whereas for a horizon of up to 3 months, investors can consider Overnight Funds and Liquid Funds. Investors should invest in line with their risk profile and product suitability.
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