Submitted by admin on July 14th, 2025
Last month July 2025 has seen a volatile yet strong stock market in India along with global inputs, and solid corporate earnings supported by cyclical moderation of inflation and sharp rotation within the sector. On our journey into the second half of the financial year, the investors are largely being cautious- optimistic due to the clarity in central banks, domestic macro-economic strength and retail involvement.
It is a detailed July update on major indices, sectors, FIIs/DIIs performance, IPO performance, and prospects.
By the mid of July, 2025, benchmark indices have been range-bound following their fierce rally of the first half of the year:
Although the frontline stocks have turned a bit consolidated, the backwash is still optimistic with stringent liquidity persisting in the country and a positive movement in earnings.
In their latest policy this month (July), the Reserve Bank of India did not change the repo rate and it remained the same at 6.25 percent and the policy is of neutral position. Inflation has eased and CPI has come down to 4.3% thereby allowing hope to take place with regard to any further rate cuts later on this year.
The yields on bonds have mellowed to a degree and the shares of real estate and NBFCs behaved well.
The equity markets across the world have conflicting patterns in July:
But the growth data of China remains unimpressive, leading stocks in the Asian markets to have periodical sell-offs.
Q1 FY26 results are beginning to stream in and the initial indicators are not positive. The IT sector has also not met its expectations as there has been a slow US demand. On the contrary, the auto firms and banks have registered robust growth. FMCG companies have indicated that they have experienced an improved demand in the rural sector, but are facing challenges over margin pressure due to input cost hikes.
Performance Sector-Wise: What is Hot What is Not
The auto stocks are still doing very fine in the month of July. There exists high demand of passenger vehicles, electric vehicles (EVs), and commercial vehicles. Tata Motors, Mahindra & Mahindra, and Bajaj Auto are the examples of companies that have reported high quarterly results. As electric mobility takes momentum, it is believed that the next Union Budget will come out with new policies which will be able to propel this industry further.
Stocks in the banking sector are performing consistently well, in particular those in the private sector such as HDFC Bank, ICICI Bank and Axis Bank. They have a stable margin, good asset quality and increasing credit growth. Interest rate concerns are also easing with the NBFCs like Bajaj Finance and Cholamandalam capturing the interest of the investors.
IT Sector- On the Strain
The IT industry is now overworked. The margins are becoming narrow and new orders are becoming sluggish because of poor demand in the US and Europe. Infosys and Wipro, big companies have failed to live up to the mark. Nevertheless, other Tier-2 IT businesses that provide niche services are fairing better. As things stand, the majority of investors continue being wary about large-cap IT stocks.
Healthcare and pharma stocks have seen steady buying in July. Companies like Sun Pharma, Dr. Reddy’s, and Apollo Hospitals are performing well. With global uncertainties and a weakening rupee, pharma has become a defensive sector for investors. Rising interest in insurance and medical coverage is also benefiting diagnostic labs and hospital chains.
Infrastructure and capital goods stocks have gained momentum thanks to strong government spending and PLI schemes. Companies like Larsen & Toubro and Siemens are witnessing a rise in new orders and better execution. Railway, port, and energy-related stocks are also being re-rated positively by analysts.
Foreign Institutional Investors (FIIs) have turned into net buyers again in July after staying away for two months. The easing of inflation and clearer guidance from the US Fed have brought them back. So far, FIIs have invested over ₹11,000 crore in July, with most of the buying focused on auto, financial, and capital goods sectors.
Domestic Institutional Investors (DIIs) continue to be strong supporters of the Indian market. Mutual funds and insurance firms are investing consistently. SIP contributions are steady, averaging over ₹17,000 crore per month. Retail investors now account for more than 55% of trading volumes on NSE, setting a new record.
The IPO market remained active in July. Three major IPOs—one from the fintech space, another from specialty chemicals, and one from the EV battery sector—hit the market. All of them were heavily oversubscribed and listed with 15% to 40% gains. The SME IPO segment also continues to boom, especially on the BSE-SME and NSE-Emerge platforms. However, investors are advised to stay cautious, as SME investments come with higher risks.
Out of overheated sectors such as IT, FMCG, money seems to be flowing into sectors which appear to be still relatively undervalued, such as infrastructure, capital goods and PSUs. As a matter of fact, PSU banks and defence stocks have been upbeat this month.
The investors are looking forward to the Union Budget. The major expectations are relief in tax on middle classes, an alteration in the slab of income, more expenditure in infrastructure development, and backing of green energy and make in India campaigns. Such expectations are already contributing to a pre-budget rally, in certain sectors.
This month midcap and smallcap stocks have outperformed large-cap stocks. The BSE Midcap and the Smallcap indices are hitting all time high. But analysts are cautious because valuations of certain smallcaps are becoming excessive. The message to investors will be to remain quality focused and not to leap into over hyped stocks.
Indian rupee is stable as it has been trading around 83 to 83.4 rupees per one US dollar. The RBI is putting extra effort to prevent any significant deviations. The price of the crude oil is stabilizing at 78 80 dollars a barrel, which can be handled, and will lead to the decline in the Indian import expense. Gold is also trading at around 66,000 rupees a 10-gram coin, this is drawing investments that need a safe vehicle to deposit money in due to the uncertainties created in the world arena.
IPOs and midcaps are actively being traded by retail investors, seeking to exploit short- term movements in prices. Meanwhile, a huge chunk of the investments in SIPs are being sustained by many people who demonstrate their long-term investing interest. Other newer investments such as REITs, gold bonds and global ETFs are also being looked into by the investors. More young investors, particularly below the age of 35, are turning to the investment apps and other AI-enabled tools to track their day-to-day trades and portfolios.
It is a positive mood in the market but one should be cautious about a couple of things. Small-cap stocks seem to be in their 2018 highest, and their values are risky at the moment. Concerns about the slowdown of the US economy and tumbling issues in the Chinese real estate arena are still persisting all over the world. We might get a short-term sell off in case the US Fed starts taking a different tone or in case the Budget due in a short period turns out to be not very encouraging. Analysts suggest that one should remain in a diversified position and also make some profits in overheated areas.
In the future, the market will be influenced by some factors. The largest of these is the Union Budget 2025 which is anticipated later this month. The next meeting of the US Fed is also under the watch of the investors who might finally announce the first rate cut. The earnings season will be prolonged and investors will be keeping a tab on the progress of monsoon, particularly on the agri linked and FMCG stocks. Sudden responses might still be a result of the global risk events.
The majority of analysts think that Nifty may hit 24,500 to 25,000 in September provided that earning announcements and Budget are high according to expectations.
Indian stock market has been very mature and resilient in the month of July 2025. Despite the issues on the global front, some local issues, including robust domestic flows, good earnings, and favorable policies, have kept the morale going. At the daily front, IPOs and midcaps are offering activity and long-term holders are looking at good quality shares.
The growth story of India is on course and unless there are any major shocks by international markets the future does look good.
Investor Pro Tip: You have the word: remain invested, diversify and any market correction should be viewed as an opportunity to purchase quality stock at improved prices.
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