MARKET PULSE - JULY 2025 TO SEPTEMBER 2025

The quarter opened on a positive note with the RBI cutting the repo rate by 50 bps to 5.50% on June 6, 2025, signalling its intent to revive credit growth and stimulate economic activity. While lower borrowing costs and improved liquidity supported sentiment, optimism was tempered by the U.S. imposing an additional 25% tariff on Indian imports linked to Russian crude purchases, taking total tariffs to 50%.

Domestically, the GST rate rationalization was a key highlight, making several essential and discretionary goods cheaper and boosting consumption. Together with good monsoons, beneficial income tax structure, the 8th Pay Commission rollout, and an accommodative monetary policy, the outlook for growth remains robust. Further, RBI’s reforms allowing banks to fund M&A and leveraged buyouts, along with its higher GDP forecast (6.8%) and lower inflation estimate (2.6%), further reinforce confidence in India’s economic trajectory.

Despite supportive domestic factors, Indian equities remained range-bound and volatile through the quarter, weighed down by global trade concerns and cautious investor sentiment. The performance of key indices during the period was as follow:

Index	1 July 2025	30 Sept 2025	Return (%)
Nifty 50	25,542	24,611	-3.65%
Sensex	83,697	80,268	-4.10%
CNX 500	23,615	22,734	-3.73%

Corporate earnings, however, continued to demonstrate resilience. For Q1 FY2025–26, the CNX 500 companies reported healthy year-on-year growth:

Particulars Q4FY24-25 vs Q4FY23-24	Median Sales Growth	Median Operating Profit Growth	Median Profit After Tax Growth
CNX 500	9.39%	9.69%	10.61%

WHAT NEXT?

The Q2 FY2025–26 earnings season, beginning in October, will be pivotal for market direction. Investor sentiment will hinge on management commentary around demand, costs, and trade impacts. While any earnings softness could trigger a correction, strong results may reignite bullish momentum.

Though the full effect of U.S. tariffs is yet to play out, India remains supported by structural growth drivers—policy reforms, healthy monsoons, resilient domestic economy, and an accommodative RBI. In this environment, a systematic and staggered investment approach remains the most prudent strategy to balance opportunity with near-term volatility.