Domestic Equity Market Performance

 

• BSE Sensex and Nifty 50 declined by 0.36% and 0.53%, respectively, marking the fourth consecutive week of losses.
• Nifty Midcap 150 and Nifty Small Cap 250 fell by 1.63% and 2.96%, respectively.
• The rupee weakened to ₹86.39/USD amid global uncertainty and a stronger dollar index.

 

 

Key Drivers

 

• Uncertainty over the India-U.S. trade deal, with potential missed deadline of Aug 1, 2025, due to deadlocked tariff talks on agricultural and dairy products.
• Weakening Q1FY26 corporate earnings and persistent foreign investor outflows.
• Losses mitigated by optimism from the newly signed India-U.K. free trade agreement, enhancing tariff relief and bilateral market access.
• Foreign Institutional Investors (FIIs) remained the persistent net sellers offloading over ₹11,572 crore worth of equities during the week.

 

Sectoral Performance

 

• Gainers: Nifty Health Care (+1.21%), Nifty Financial Services (+0.95%), Nifty Bank (+0.44%).
• Losers: Nifty Media (-5.73%), Nifty Realty (-4.93%), Nifty IT (-4.09%), Nifty Oil & Gas (-3.53%), Nifty FMCG (-3.41%).

 

Global Markets Performance

 

• U.S.: Dow Jones Industrial Average fell 0.70%, while S&P 500 gained 0.07%, driven by sector-specific dynamics.
• Europe: FTSE rose and Germany’s DAX declined by 1.43% and 0.30%, respectively.
• Asia: South Korea’s KOSPI rose 0.18%; Hong Kong’s Hang Seng and Shanghai Composite rose by 2.27% and 1.67%, respectively, amid regional economic uncertainties and global trade tensions.

 

Key Drivers

 

• Mixed corporate earnings, stalled global trade negotiations, and economic uncertainties impacted market sentiment.

 

Debt Market

 

• The 10-year benchmark paper (6.33% GS 2035) yield rose by 5 bps to 6.35% from 6.30% the previous week.
• Yields increased due to a narrowing banking system liquidity surplus from tax outflows and hawkish remarks by the RBI Governor, reducing investor appetite for debt securities.

 

 

Economic Update

 

India-U.K. Comprehensive Economic and Trade Agreement (CETA)

 

• Signed agreement grants duty-free access to 99% of Indian exports (~USD 23 billion).
• Key sectors benefiting: agriculture, marine products, leather, textiles, engineering goods, electronics, pharmaceuticals, chemicals, gems and jewellery.
• Enhances trade in services (IT, professional mobility), exempts Indian workers from U.K. social security contributions, and promotes innovation and certification standard cooperation.

 

 

Index of Eight Core Industries

 

• Rose 1.7% YoY in Jun 2025, down from 5.0% in Jun 2024.
• Strongest growth: steel (+9.3%), cement (+9.2%).
• Steepest decline: coal (-6.8%).

 

 

Private Sector Activity

 

• Composite PMI at 60.7 in Jul 2025, slightly down from 61 in Jun 2025.
• Manufacturing PMI hit a 17-year high, outpacing services, sustaining economic momentum with PMI above 60 for two consecutive months.

 

Foreign Direct Investment (FDI)

 

• Net FDI plummeted 98.2% to $40 million in May 2025 from $2.2 billion in May 2024.
• Driven by higher repatriation/divestment ($5.0 billion vs. $4.1 billion) and increased outward FDI ($2.1 billion vs. $1.8 billion).

 

 

Best Regards
 

 

Alpha Research

 

Disclaimer:  The perspectives provided reflect our expectations of the economy, market, and investments, which may or may not materialize. Investors are encouraged to conduct their own due diligence before investing.