Market Outlook
| October 31, 2025 | 1 Month |
1 Year |
|
| Rupees per Dollar | 88.77 | 88.79 | 84.08 |
| Oil (dollars per barrel) | 65.07 | 67.02 | 73.16 |
| Retail inflation (CPI) | 1.54% (September) | 2.07% | 5.49% |
- The US Federal Reserve (Fed) cut the policy rate by 25 bps to 3.75–4.00% in its October 2025 policy meeting. Fed governor pushed back on a December cut stating that policymakers are divided especially in light of the lack of data due to government shutdown.
- On the domestic front, benign inflation and uncertain growth outlook have opened room for further rate cuts from the RBI. Tariff related developments and Fed actions will be the key monitorable for the domestic policy rate trajectory. In the absence of a favourable trade deal, we expect RBI to cut policy rates by 25 bps in the December policy meeting.
- We continue to remain ‘neutral’ on the outlook for bond markets. We expect the 10-year yield to trade in a range of 6.40%-6.60% and the long term yields to remain under pressure.
| Index | 1 month (%) | 1 year (%) | 3 years (%) |
|---|---|---|---|
| NIFTY50 | 4.5 | 6.3 | 12.6 |
| BSE100 | 4.6 | 5.7 | 13.6 |
| NIFTY500 | 4.3 | 4.5 | 15.4 |
| NIFTY Midcap100 | 5.8 | 6.6 | 23.9 |
At October 31, 2025
Nifty was up 4.5 % for the month of October 2025
- Markets have done well due to GST cut announcement and festive demand
- Within BSE 100 index, amongst sectors EPC / Telecom outperformed while Cement / Auto underperformed the broader market
Our outlook remains neutral in the short term while it remains positive in the medium term
- Q2FY26 earnings are marginally better than expectations
- Tariff related uncertainty has reduced but we still need to be watchful
- The Nifty’s one year forward P/E at 23x, is above its 5-year average
- Supply of paper remain high leading to pressure on the broader market
In the medium term, we expect certain important drivers for growth:
- Policy environment increasingly getting growth oriented supported by rate cuts (CRR, repo), tax cuts/rationalization (income tax, GST), liquidity boost etc
- Growth drivers in place in the form of demographic benefits, rising formalisation, manufacturing focus and digitisation, strong corporate balance sheets
- India is pursuing bilateral trade agreements to mitigate the US tariff impact
Market consensus for Nifty earnings CAGR over FY2025-FY2027 at 9%
COMP/DOC/Nov/2025/511/1456
