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Fairness Market Insights:
Fairness markets stay in a constructive bias until some catastrophe happens that would break the upside momentum. Policymakers are fast to course right when markets throw tantrums. As we recall, the BSE Sensex corrected by 8.3% between October 2024 and March 2025. We noticed some essential components coming collectively to weigh available on the market sentiment throughout this time. Forward of elections, the federal government diminished spending, and the RBI tightened liquidity by Rs 3–4 lakh crore to help the rupee. This, mixed with slowing consumption, weak company earnings and international tariff issues, led to the correction.
The current Apr–Jun 2025 quarter introduced a welcome summer time rally for traders. The Sensex gained round 10%, with most main sectors performing well- actual property and monetary companies main the way in which. What drove this uptick? Anticipated improve in company earnings, easing geopolitical tensions, a pause in international tariff selections, surplus liquidity and FPIs turning internet consumers for all the quarter.
Fairness markets within the US additionally hit report ranges on account of ease of geopolitical tensions, dovish fed and commerce developments, however financial knowledge launched in early July for Q1 2025 (Jan-Mar) presents a combined image. In Q1’25 US Economic system contracted at a price of 0.5% annual price, the primary unfavorable studying since Q1 2022. On the similar time, inflation within the US stays above goal (Core PCE at 2.7% in Might), making rate of interest selections difficult. The area will stay delicate to knowledge round inflation, charges, and commerce going ahead.
What can we count on for Indian markets within the close to time period? India Inc’s company revenue development has been modest up to now (Nifty firms are anticipated to develop June quarter internet earnings by 4.6% YoY). Financial and monetary insurance policies selections within the type of the current price cuts and price range tax breaks can elevate family consumption, particularly within the festive season forward. Consumption already accounts for ~63% of India’s GDP, and this home power is crucial to cushion the affect of worldwide uncertainties.
We stay cautiously optimistic as supply-side pressures in fairness markets are rising once more and pose a key threat for fairness returns. General provide is up sharply. Bulk & Block offers (B&B), IPOs, Rights Points, QIPs are up 103.5% q-o-q and 10.8% y-o-y.
Elevated valuations on the again of a rebound in investor sentiment additionally make the market extra delicate to unfavorable surprises. Giant caps are buying and selling near their historic averages whereas mid & small caps are at 22% and 44% premiums respectively. If we see the info, massive caps have clearly been extra resilient for YTD 2025: Giant caps are up 5.2%, whereas mid-caps are practically flat, and small-caps have declined. We stay centered on staying disciplined in our strategy- backing high-quality, large-cap worth portfolios that helps managing threat and supply higher upside potential with a long-term view.
Debt Market Insights:
Charge cuts are right here, what does it imply for the bond markets?
The Reserve Financial institution of India (RBI) has formally moved right into a rate-cutting cycle, delivering a complete 1% discount within the repo price since February 2025. The cuts got here in three rounds- 25 bps every in February and April, and a extra aggressive 50 bps in June. This shift clearly alerts that the inflation battle is, for now, beneath management. In actual fact, retail inflation in June hit a six-year low of two.1%, pushed largely by falling meals costs. Robust agricultural sowing and good reservoir ranges additionally level to a benign meals inflation outlook within the coming months. Nevertheless, we stay watchful of worldwide dangers, notably any recent volatility from commerce developments or oil value shocks.
The RBI has made it clear: the precedence now’s to stimulate home consumption and personal funding. Entrance-loading price cuts are a strategic transfer to spice up financial momentum and revive the credit score cycle, which is a vital transmission channel in India. Traditionally, when banks sense stronger financial momentum, they’re extra prepared to lend. But when they understand dangers forward, they have an inclination to drag again, particularly in lending to NBFCs or precedence sectors like agriculture, as we noticed in 2024. With rates of interest easing and inflation subdued, monitoring home credit score traits within the coming months will likely be essential.
The bond market has responded shortly to the 1 proportion level repo price lower. As anticipated, short-term yields have fallen quicker than long-term ones, resulting in a steepening yield curve. It is a basic signal that we’re possible approaching the top of the rate-cut cycle, particularly with the RBI now shifting its stance from “accommodative” to “impartial”.
On this atmosphere, short-duration debt funds are higher positioned than long-duration ones, as they profit extra from near-term price changes and system liquidity.
Arbitrage funds stay a gorgeous choice for short-term money administration, providing tax-efficient returns. However given their sensitivity to fairness market swings, we advocate pairing them with ultra-short-term debt funds to take care of portfolio stability and liquidity.
Different Asset Lessons:
Gold as an asset class has delivered the best returns month over month in 2025 up to now, pushed by international macro and financial tailwinds. Gold Mini is up 24.3% YTD’25 and 32.11% within the final one yr.
As we’ve persistently advocated, sustaining a strategic allocation of 10 – 20% to gold can improve portfolio resilience, particularly in periods of heightened international financial uncertainty. This quarter was one other robust validation of that view.
Coming to actual property, India’s prime residential actual property markets noticed a 14% year-on-year decline in gross sales in the course of the June quarter, largely pushed by pricing issues. New undertaking launches additionally slowed, as international geopolitical uncertainty weighed on demand. Affordability challenges are more and more straining the broader housing market. In the meantime, builders are shifting their focus towards the premium phase, which has remained extra resilient.
Nevertheless, actual property general has turn out to be costly. We’re advising purchasers to keep away from recent property purchases at this stage. Given components like illiquidity, cyclical traits, value volatility, and prolonged holding intervals, we advocate capping actual property publicity at 20–25% of your complete portfolio.
Truemind’s Mannequin Portfolio – Present Asset Allocation
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