NIFTY & INDIAN EQUITY MARKET OUTLOOK FOR JULY -AUGUST 2025
-RAHUL VASHISTHA
Date: 04-JULY-2025
As I had mentioned in my previous blog written on the 30th May, that the Indian equity markets can stay rangebound with no significant upside visible. I would now try to address the recent developments & the view on the markets.
The market is at an interesting Juncture, with many brokerages houses bearish given the valuation & while others on the bullish side given the growth prospect of India, lets delve into the details & try to get a better sense of possibilities of where the markets can head.
Major Development in June 2025
- RBI REPO RATE & CRR CUTS
The RBI has cut the repo rate by 50 bps vs the street expectation of 25 bps, which is seen as very positive & the CRR cut of 100 bps was the cherry on the top. This in turn will prove to be the liquidity bazooka which the markets were in desperate need.
Repo cut would be beneficial for consumers lowering their interest burden, whereas the CRR cut shall increase the liquidity across Banks & NBFC & also their propensity to lend.
Private Capex has been subdued across India with no leading firm other than the Adani Group showing any animal instinct or hunger, This precise point is what Mr. Uday Kotak alludes to in most of his recent speeches. Hence, I do not see any meaningful impact of RBI actions on corporate India front.
2. CAPEX Led story will be out of flavor
Central Govt. gross tax revenues grew by 6.5% yoy in Apr v/s 2.8% in Mar. Corporate tax collections remained under pressure and dropped by 41% yoy in Apr while personal income tax grew by 10.8%.
Advance tax collections till 19th June 2025 grew by 6% yoy for corporates and fell by 3% yoy for non-corporates. This is still better than 4QFY25. Centre capex grew by 61% yoy while revenue expenditure fell by 5.7%, but capex momentum will not sustain as centre’s tax revenue collection is weak. This narrative is also supported by the muted budget allocation for Road development.
- As previously mentioned, the Inflation is at an all-time low since Covid & is touching the 2019 levels.
PROMOTER SELLING SAGA
As soon as we hear the news of promoter selling, we turn cautious on the markets & it’s usually seen as negative for the business as well. Again, this has been the highlight for the past couple of years &, I’ll not delve into monthly figures but try to address the macro picture.
About Rs 14.5 lakh crore has come into equity markets from FY21 from domestic institutions & at a global level India’s free float across sectors is one of the least. Free float is about 46% for IT and FMCG also has a free float of about 45-47%. These are the two sectors with least free float. Pharma also has very little free float.
Promoters have sold about Rs 60,000 crore of their stake in H1CY25, viz a viz Rs 89000 crores for CY24 & Rs 1 lakh crore in FY23. With MFs & Other institutions sitting with 2 lac crore+ of record cash level, I expect the promoter selling to continue & DIIs increasing their stakes across board.
How should we judge it?
Out right promoter selling on its face value can’t be termed as right or wrong, it can be analysed only on a case-to-case basis, depending on the purpose & the valuation at which the stake has been sold.
Market correction of 2024 vs Expectations for 2025
Inherently markets like visibility & Certainty.
Nifty & Small & mid -cap nifty are almost touching their September 2024 highs & hence, many of you might be worried that are we going to witness another sharp fall in the markets?
Last rally was CAPEX led rally
First, we need to understand the reasons that caused the correction last year: till the election time frame the companies across the board were posting exceptional growth in their topline & as well as their profitability front.
& hence all the earnings estimate of fund houses were very gung-ho for FY25 & FY26.
But in the Quarters that followed the elections i.e. Q1 & Q2FY25, there were serious downgrades both in terms of order inflows for the companies as well as on their topline & profitability front, which was a shocker & took the street by surprise.
This in turn resulted in EPS estimates downgrade across the street as well as lowering of India’s projected growth rate. This caused massive sell-off in the markets.
In 2025
Markets Resilient through uncertainties
In-terms of geo-political scenarios, whatever could’ve have gone wrong has gone wrong in the past month.
Crude has seen sudden spikes due to war.
Interim tariff relief will come to an end during the next week, which can again cause some hiccups in the markets.
OUTLOOK
Underlying point is that markets are always forward looking & it has already factored in the slow growth & all the estimates for FY26 & FY27 have been re-adjusted.
Overall, the negative news has been accounted for I do not foresee any significant Downside or major market correction although some near term & short-lived corrections in the markets can come but Markets can make the new Highs by the end of CY-25, i.e towards the end of this year. Don’t be surprised to see market making new highs towards the end of the year. This shall be CONSUMPTION led rally & not CAPEX led.
For the consumption sector the growth in Topline & EPS shall be gradual till Q2FY26 & would see a meaningful impact only in the Q3FY25 results. This is also supported by the quarterly update of Marico which is suggesting strong revenue growth of 20%+ in Q1FY26.
POCKETS OF GROWTH
For the benefit of my readers, I’ll try to give you some indication of the sectors which are currently the pockets of growth in the Indian Markets
In 2W companies like R.E (Eicher) & TVS, Tyre Industry, Tractor Industry, Specialty chemicals, Agro-chemicals, EMS, AI & Data centre, Capital market stories, Value retail , Q-commerce, CDMO space in pharma, Electricity transmission & distribution space & last but not the least Consumption space (which will pick up only gradually) are the areas that are expected to perform well.
NOTE: Feel free to contact me for any query that anyone has regarding the markets, I shall be more than happy to address the same & also kindly provide the feedback which can help in improving my content & serve my readers better.