By Analysis desk
Could 2025 Market Efficiency Recap:
The Indian inventory market demonstrated resilience and constructive momentum in Could 2025, ending the month with beneficial properties throughout key indices regardless of durations of consolidation. The benchmark NIFTY50 concluded Could with roughly 1.7% beneficial properties, whereas the BSE SENSEX additionally confirmed a constructive development for the month. As of June 9, 2025, Nifty 50 closed at 25,103.20 and Sensex at 82,445.21.
The broader markets considerably outperformed the frontline indices in Could, signaling a broad-based restoration and investor confidence. The broader Nifty 500 additionally gained 3.50%. This robust efficiency within the broader market signifies sturdy investor curiosity past large-cap shares.
Key catalysts for market motion included world cues and essential home coverage selections. The RBI Financial Coverage Committee (MPC) Assembly on June 6, 2025, was a serious occasion that considerably influenced market sentiment. The RBI made a extra aggressive-than-expected coverage announcement, reducing the repo fee by 50 foundation factors (bps) to five.5%. This was coupled with a stunning 100 bps minimize within the Money Reserve Ratio (CRR), scheduled to inject ₹2.5 trillion of liquidity into the monetary system by December 2025. Buyers largely cheered these strikes, boosting sentiment and sparking hopes of renewed credit score offtake, particularly benefiting banking and actual property sectors. Optimistic openings in Asian markets attributable to constructive U.S. financial information and renewed commerce hopes, alongside beneficial properties in European shares from a U.S.-UK commerce deal, additionally supplied supportive world tailwinds.
Overseas Institutional Buyers (FIIs) confirmed combined exercise in Could, usually being internet sellers on a number of days, however DIIs persistently supplied robust shopping for assist. As an example, on Could 29, 2025, FIIs had been internet sellers with ₹6,449.74 crores, whereas Home Institutional Buyers (DIIs) had been robust internet patrons with ₹9,095.91 crores. In early June, post-RBI motion, FII exercise has proven indicators of turning constructive, with FIIs turning into internet patrons on some days, possible influenced by the RBI’s fee cuts and improved sentiment, whereas DIIs continued their sturdy assist.
General, Could 2025 noticed a resilient efficiency backed by robust home fundamentals and the RBI’s accommodative stance. The market sentiment seems reasonably bullish, with an in depth eye on the sustained influence of the speed cuts and ongoing world developments.
Sectoral efficiency
In Could 2025, Indian equities exhibited a combined sectoral development, reflecting numerous market drivers from coverage actions to world developments. The standout performer was the defence sector, which rallied a powerful 21.8% on the again of a powerful coverage push for indigenisation, document MoD contracts, and heightened geopolitical tensions. Actual property gained 7.17%, supported by sturdy demand and expectations of improved financing situations following the RBI’s fee cuts in early June. Metals superior 7.12% amid rising world commodity costs and agency home metal demand projections. The vitality sector rose 4.78%, pushed by the federal government’s renewable focus and long-term development prospects, whereas autos climbed 4.56% on wholesome gross sales, rural restoration, and EV momentum. IT rebounded 4.27%, aided by upbeat earnings and improved world tech sentiment. Banks noticed a modest 1.2% acquire, with optimism constructing after the RBI’s coverage shift. Client durables rose barely by 0.7%, constrained by excessive valuations and combined demand developments.
On the flip aspect, FMCG was among the many weakest performers, declining 2.06% attributable to slower quantity development, value pressures, and tepid rural sentiment. Healthcare slipped 1.16% as buyers booked earnings and earnings remained muted, with rising prices and rising competitors including to the strain.
Within the following sections, we offer a extra complete examination, outlook and detailed insights of some main sectors:
Auto:
The Indian auto sector delivered a steady efficiency in Could 2025, with wholesale volumes rising 9.8% YoY, supported by broad-based development throughout segments. Two-wheelers (2Ws) led the restoration, benefiting from sturdy rural demand, seasonal components like weddings, and post-harvest revenue flows. Passenger car (PV) volumes had been comparatively muted, affected by a excessive base and cautious shopper sentiment, although exports noticed a pointy uptick.
Retail developments had been softer, with whole car registrations declining ~4% YoY, largely attributable to a dip in PV registrations (down 8.6% YoY) and subdued financing situations. In distinction, EV gross sales grew 16.1% YoY, pushed by expanded mannequin availability and rising competitors, particularly within the 2W section. Nonetheless, current world provide chain points associated to uncommon earth metals might pose near-term dangers to EV manufacturing.
Business automobiles (CVs) posted modest development, backed by enhancing infrastructure exercise and elevated authorities spending. Nonetheless, retail demand remained patchy, with muted fleet substitute and restricted pre-buying forward of upcoming regulatory adjustments.
The tractor section remained resilient with average development, supported by beneficial reservoir ranges, wholesome procurement developments, and a constructive monsoon forecast.
Demand momentum stays intact throughout most auto segments, aided by rural restoration, seasonality, and coverage assist. Key monitorables embrace monsoon progress, rate of interest trajectory, and potential disruptions in EV provide chains.
Metals:
The steel sector gained floor in Could, however underlying fundamentals recommend a extra balanced outlook going ahead. Home metal costs softened by 2.1% month-on-month to ₹51,400 per tonne, largely attributable to a seasonal slowdown in development exercise with the early arrival of the monsoon and tighter market liquidity. On the worldwide entrance, metal manufacturing noticed a broad-based decline—China’s output fell by 7.3% MoM, and general world manufacturing dipped 6.3% MoM—highlighting subdued demand from main consuming sectors. Regardless of flat Chinese language metal exports, rising U.S. tariffs have reignited commerce issues, including strain to worldwide pricing.
On the enter aspect, prices moved favourably for producers—iron ore and coking coal costs dropped by 4.6% and a couple of.0% MoM, respectively, which may support margins in upcoming quarters. Within the non-ferrous house, aluminium costs climbed 2.8% following recent tariff hikes within the U.S., whereas copper surged 4.1% as inventories tightened sharply at LME warehouses. Zinc too noticed a light uptick amid falling world inventory ranges.
Trying forward, whereas India’s long-term demand outlook stays robust—particularly with infrastructure-led development—short-term headwinds like rising provide and muted world momentum might weigh on worth stability. Given these crosscurrents and elevated valuations, we preserve a impartial stance on the sector for now.
Chemical substances:
The chemical sector continued to face strain in Could 2025, with weak pricing developments and subdued world demand weighing on efficiency. Whereas This autumn FY25 confirmed early indicators of quantity restoration and sequential margin enchancment—due to value management and higher plant utilisation—the broader sector stays beneath pressure. Challenges reminiscent of Chinese language overcapacity, dumping, and sluggish end-user business demand have saved worth realisations muted.
Agrochemicals remained beneath strain attributable to elevated channel inventories and delayed restocking, whereas the contract growth and manufacturing (CDMO) section for pharma confirmed power, backed by a wholesome order pipeline and constant development visibility. On the worldwide entrance, European competitiveness stays low attributable to weak demand and excessive vitality prices, additional impacting petrochemicals and primary commodities.
When it comes to product pricing, the month noticed combined developments—refrigerants and caustic soda remained agency, whereas acetone, ethanol, methanol, aniline, and phenol declined. Palm oil costs rose attributable to greater import duties, and bromine remained steady.
Trying forward, a significant restoration will hinge on world demand stabilisation, easing of Chinese language aggressive pressures, and a revival in industrial end-use segments. Importantly, India’s structural shift from bulk to specialty chemical compounds is anticipated to drive long-term development, supported by world prospects adopting China+1 sourcing methods. Regardless of short-term volatility, the medium- to long-term outlook stays constructive, particularly for gamers centered on value-added, differentiated chemical merchandise.
Banking/Finance:
The banking sector posted a modest 1.2% acquire in Could, as buyers remained cautious forward of the RBI’s financial coverage announcement. Nonetheless, sentiment turned sharply constructive following the RBI’s surprising 50 bps repo fee minimize and a 100 bps CRR discount in early June. The CRR transfer alone is about to launch ₹2.5 lakh crore into the banking system, considerably enhancing liquidity situations.
These coverage actions are anticipated to decrease borrowing prices and drive a revival in credit score demand, notably in retail and SME segments. The shift in RBI’s stance to ‘Impartial’—with inflation projected at 3.7% and GDP development pegged at 6.5% for FY26—displays a supportive coverage setting for lending development.
Indian banks are coming into this section with robust fundamentals, together with sturdy capital adequacy, improved asset high quality, and record-low NPAs. Personal sector and retail-focused banks are well-positioned to steer the subsequent credit score cycle. NBFCs are additionally more likely to profit from the liquidity increase, whereas the broader monetary ecosystem continues to achieve from digital acceleration and macroeconomic stability.
General, the outlook for the sector has improved meaningfully, backed by coverage assist, structural resilience, and rising credit score urge for food.
Vital occasions & updates
Just a few vital occasions of the final month and upcoming ones are as beneath:
- In Could 2025, the RBI minimize the repo fee by 50 bps to five.50% and the CRR by 100 bps to three%, marking the bottom borrowing prices since August 2022. With a shift to a impartial stance, whole fee cuts since February now stand at 100 bps, geared toward supporting development amid easing inflation and world commerce uncertainty.
- India’s GDP grew 7.4% YoY in This autumn FY25, up from 6.4% within the earlier quarter and properly above the anticipated 6.7%, marking the strongest development of the fiscal 12 months. The rebound was pushed by decrease meals and vitality costs, easing rates of interest, improved funding exercise, and India’s resilience to world commerce headwinds attributable to its low export dependence.
- India’s Composite PMI got here in at 59.3 in Could 2025, barely above April’s 59.7 however down from the flash estimate of 61.2, indicating robust general exercise with slower manufacturing development offset by rising companies momentum.
- India’s Manufacturing PMI stood at 57.6 in Could 2025, indicating continued robust growth in manufacturing facility exercise, supported by sturdy demand and manufacturing momentum.
- India’s Providers PMI was revised to 58.8 in Could 2025, down from the flash estimate of 61.2 however barely above April’s 58.7, marking the quickest development since February, pushed by rising output and new orders.
Basic outlook:
India’s financial panorama continues to shine with a mix of strong development, managed inflation, and proactive policymaking. GDP development for This autumn FY25 stood at a powerful 7.4% year-on-year, taking full-year development to six.5%. With FY26 projections holding regular at 6.5%, India stays the fastest-growing main financial system globally. Inflation has moderated sharply, with April CPI easing to three.2%—a six-year low—creating room for the Reserve Financial institution of India to concentrate on development. In a serious coverage increase, the RBI minimize the repo fee by 50 bps to five.5% in June, its third consecutive minimize, supporting credit score growth and market sentiment. Fiscal consolidation additionally stays on monitor, with the FY25 deficit at 4.8% and a tighter 4.4% goal set for FY26.
Externally, the present account stays properly managed, with the FY25 CAD at simply 0.8% of GDP. Industrial and company information additional affirm resilience—April IIP rose 2.7%, and company earnings mirrored wholesome topline development of 6.2% with margin enchancment. Overseas buyers have returned, led by robust inflows in capital items, telecom, and financials. Home institutional participation has grown to almost match that of FIIs, offering extra market stability. The enhancing labour market—with unemployment down to three.2%—provides one other layer of assist to consumption-driven sectors. General, the basics level to a sustainable and broad-based development cycle, underpinned by prudent fiscal and financial administration and enhancing investor confidence.
Technical outlook.
Indian equities are technically robust, with the Nifty 50 and Sensex hovering close to document highs at 25,100 and 82,400, respectively. The Nifty stays well-supported on the 25,000 psychological stage, with firmer assist round 24,200–24,500, whereas quick upside targets are seen at 25,700.
Momentum indicators reinforce the bullish development. The Nifty is buying and selling above all key EMAs—20, 50, 100, and 200-day—indicating robust development continuity. The RSI lies between 61, suggesting sustained power although coming into overbought zones, which may immediate temporary consolidation phases. MACD reveals a bullish crossover throughout a variety of shares, additional confirming upward momentum. With India VIX round 16.08, volatility stays average, implying that markets are regular with manageable danger.
Including to the power of the technical setup is the constant efficiency in tax collections. April 2025 noticed a record-high month-to-month GST assortment of ₹2.36 lakh crore, pushed by year-end filings and higher compliance. Could 2025 adopted with ₹2.01 lakh crore, the second-highest ever, supported by IGST on imports and powerful home commerce. Notably, GST revenues have remained above ₹1.7 lakh crore for over 9 consecutive months, indicating a resilient consumption base and reinforcing confidence within the financial restoration.
Outlook for the International Market
US Market:
US Market Navigates Crosscurrents of Moderating Inflation and Financial Slowdown
The US market is at a pivotal juncture, grappling with a mixture of encouraging inflation information and indicators of a cooling financial system. Whereas the headline inflation figures have proven a welcome decline, underlying financial indicators and a cautious Federal Reserve are tempering investor optimism. The outlook for the rest of 2025 will largely rely upon the central financial institution’s capability to orchestrate a “tender touchdown” – bringing inflation again to its goal with out triggering a big recession.
Latest information paints a posh image. The annual inflation fee, as measured by the Client Worth Index (CPI), eased to 2.3% in April 2025, its lowest stage since February 2021. This has been a key driver of constructive market sentiment, fueling hopes that the Federal Reserve’s aggressive rate-hiking cycle could also be nearing its finish. Nonetheless, the market is anxiously awaiting the Could CPI information, scheduled for launch tomorrow, with forecasts suggesting a possible slight uptick.
The labor market, a cornerstone of the US financial system, can also be displaying indicators of moderation. The Could jobs report indicated the creation of 139,000 jobs, a determine that implies a resilient however cooling employment panorama. Preliminary jobless claims in early June have remained comparatively low, additional supporting the narrative of a gradual financial slowdown.
Within the fairness markets, efficiency has been combined. After a powerful begin to the 12 months, US inventory market capitalization noticed a slight decline via Could 2025, whilst world markets skilled a rally. The S&P 500 at the moment sits slightly below its all-time highs, with sectors like Supplies and Vitality just lately outperforming, whereas Financials have lagged. Market evaluation from Morningstar means that the general market is buying and selling at a modest low cost however warns of heightened volatility forward. Their suggestion is to favor worth and small-cap shares, which can be higher positioned within the present setting.
All eyes are on the Federal Reserve, which maintained its key rate of interest at its Could 2025 assembly, adopting a “wait and see” strategy. The central financial institution has acknowledged the twin dangers of persistent inflation and a possible rise in unemployment, with commerce coverage including one other layer of uncertainty. The minutes from the Could assembly and the New York Fed’s newest Survey of Client Expectations, which confirmed a lower in family inflation expectations, supply some perception into the Fed’s pondering. Nonetheless, the upcoming Federal Open Market Committee (FOMC) assembly and its up to date financial projections might be essential in shaping market expectations for the trail of financial coverage.
The bond market displays this uncertainty, with the 10-year Treasury yield experiencing vital volatility. After peaking in January 2025, the yield has remained a focus for buyers, with its actions intently tied to inflation expectations and the Fed’s anticipated actions. As of early June, the 10-year yield has been buying and selling in a variety, reflecting the market’s indecision.
Trying forward, the US market is more likely to stay data-dependent. Key releases to observe embrace the upcoming Could CPI report, retail gross sales figures, and manufacturing and companies indices (PMI/ISM). These will present a clearer image of the well being of the patron and the broader financial system, and can undoubtedly affect the Federal Reserve’s subsequent steps. Buyers are suggested to keep up a balanced portfolio and brace for continued market fluctuations because the financial narrative unfolds.
Outlook for Gold
Gold stays bullish for the second half of 2025, supported by robust home fundamentals and beneficial world cues. After a short consolidation, costs are anticipated to development greater, pushed by sturdy funding demand, an above-normal monsoon, and continued shopping for by the Reserve Financial institution of India.
As of June 10, 2025, 24-carat gold trades at ₹97,580 per 10 grams, following current volatility. Lengthy-term targets hover round ₹1,06,000. A superb monsoon is about to spice up rural demand throughout the festive season, whereas the RBI has added almost 58 tonnes of gold to its reserves in FY25, reinforcing long-term assist.
Although excessive costs have barely lowered jewelry gross sales, demand for gold bars, cash, and recycled jewelry stays robust. The rupee’s stability close to ₹85-86 has saved import prices manageable, although gold imports noticed a brief dip in April.
Globally, expectations of U.S. fee cuts and geopolitical uncertainties proceed to favour gold. General, the outlook stays optimistic, with non permanent corrections possible amid an in any other case robust upward development.
What ought to Buyers do?
The Indian fairness market is at the moment bolstered by sturdy macroeconomic fundamentals, together with robust GDP development, easing inflation, and a supportive financial coverage, highlighted by the RBI’s current 50 bps fee minimize. Moreover, a steady fiscal outlook, vital institutional inflows, and document GST collections additional reinforce the market’s resilience. Whereas fairness indices just like the Nifty and Sensex are buying and selling close to all-time highs, valuations are elevated, with the Nifty at roughly 22x ahead P/E, suggesting restricted scope for sharp near-term beneficial properties.
Subsequently, the Nifty is anticipated to stay range-bound with a slight upward bias in June. Buyers are suggested to undertake a “buy-on-dips” technique, prioritizing essentially robust sectors reminiscent of NBFCs, reasonably priced housing finance, shopper discretionary, auto, actual property, capital items, tourism, and constructing supplies, that are anticipated to profit from decrease rates of interest, elevated consumption, and authorities infrastructure spending, whereas avoiding aggressive entry at present excessive ranges.