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Below The Monthly market Outlook 12 June 2025 by Mr. Ajit Banerjee, President and Chief Investment Officer at Shriram Life Insurance

Global Markets Overview

• Initial optimism around the Trump 2.0 administration has waned due to policy uncertainty, chaotic tariff strategies, and public spats (e.g., Trump vs. Musk).

• Fed's rate cuts in Q4 CY24 and trade tensions led to a rotation of flows into Germany/EU, Japan, and EMs like India.

• US-China trade deal negotiations in London are being closely watched for global implications.

India – Macro and Market

• RBI's surprise triad: 50 bps repo rate cut, 100 bps CRR cut (staggered), and stance reversion to "Neutral" to support growth and liquidity.

• Q4 FY25 GDP growth at 7.4% (above consensus), though FY25 growth moderated compared to FY24.

• Consumption demand remains uneven, with urban slowdown offset by rural resilience.

Equity Markets

• Nifty 50: Gained 5.34% in FY25, with strong H1 (+15.6%) followed by a volatile H2 (-9%).

• Midcap and Smallcap: Outperformed early but saw sharp reversals (Midcap -14%, Smallcap -16% in H2).

• FY26 Outlook: Cautiously optimistic, supported by RBI easing, stable inflation (~3.7%), and double-digit earnings growth expectations.

Sectoral Performance

• Top Performers (FY25): Pharma (+11%), Metals (+10%).

• Underperformers: FMCG (-0.7%), Auto (-0.6%), Oil & Gas (-0.4%).

• FY26 Watch:

  • Banking & Financials: Expected to benefit from rate cuts and credit growth.

  • Pharma: Tailwinds from supply chain shifts and domestic demand.

  • IT Sector: Muted outlook for large-cap IT; midcap IT may outperform.

  • Auto Sector: Pressure from sluggish demand and global tariff uncertainty.

Debt Markets

• RBI's aggressive easing led to a steepening yield curve, with bearish G-Sec price action post-policy.

• Further rate cuts are unlikely unless inflation dips below 3.7% or growth risks escalate.

Outlook

• Domestic demand will be key, with rural consumption supported by monsoon and urban recovery expected.

• FPI flows may rebound as global uncertainties stabilize.

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