July 31, 2025 | 1 Month |
1 Year |
|
Rupees per Dollar | 87.60 | 85.75 | 83.74 |
Oil (dollars per barrel) | 72.53 | 67.61 | 79.78 |
Retail inflation (CPI) | 2.10% (June) | 2.82% | 5.08% |


- The US Federal Reserve (Fed) kept the policy rate unchanged at 4.25-4.50% for the fifth consecutive policy meeting, as was widely expected. However, the July employment report was weak, leading to markets reviving rate cut expectations at the September FOMC meeting
- India’s June CPI inflation surprised on the downside to 2.10%, averaging 2.7% in April-June 2025, lower than the RBI's forecasts. Going forward as well, inflation is expected to undershoot RBI projection further and average ~3% for FY2026
- We remain ‘neutral’ on the outlook for bond markets. Despite the downward surprise in inflation and inflation expectations, we expect that RBI to pause in its upcoming policy and focus on transmission of the frontloaded rate cuts

Index | 1 month (%) | 1 year (%) | 3 years (%) |
---|---|---|---|
NIFTY50 | -2.9 | -0.7 | 13.0 |
BSE100 | -3.0 | -1.8 | 14.0 |
NIFTY500 | -3.0 | -2.6 | 16.0 |
NIFTY Midcap100 | -3.9 | -2.7 | 24.7 |
At July 31, 2025
Nifty was down 2.9 % for the month of July 2025
- After 4 consecutive months of rally, NIFTY saw some profit booking in July 2025
- FIIs turned seller during July 2025 while DIIs flows remained steady
- Within BSE 100 index, amongst sectors Consumer/Pharma outperformed while Technology/Oil & Gas underperformed the broader market
Our outlook remains neutral in the short term while it remains positive in the medium term
- Uncertainty related to US tariffs and evolving global geopolitical situation are likely to keep markets volatile in the short term
- Global growth and inflation challenges could act as headwinds for markets
- Q1-FY2026 earnings season so far has been broadly in-line with expectations
- The Nifty’s P/E, at 22x for FY2026E, is above its 5-year average
In the medium term, we expect certain important drivers for growth:
- Domestic policy pivot has shifted in favour of ‘growth’ (CRR cut, rate cut, liquidity infusion, lower risk weights and tax cuts)
- India benefits from structural levers in the form of demographic benefits, rising formalisation, manufacturing focus and digitisation
- Corporate balance sheets remain strong which positions them well for the next leg of growth
- Earnings trajectory will be a key monitorable over the medium term
Market consensus for Nifty earnings CAGR over FY2025-FY2027 at 10%
