Indian equity investors favored large-cap companies amidst market volatility in the first half of the year. Mid- and small-cap indices underperformed compared to the previous year. The Nifty Defence index rebounded due to rising Indo-Pak tensions, while the Nifty IT index was the top loser.
Indian equity markets retreated from near record highs on Monday, ending a four-day winning streak. Profit-booking and sector-specific weakness overshadowed positive global cues and foreign fund inflows. The Sensex fell 0.54% and the Nifty 0.47%, although broader markets outperformed. Investors are now eyeing trade negotiations with the US for near-term direction.
In the first half of 2025, domestic institutional investors aggressively bought Indian equities, exceeding 3.5 lakh crore, while foreign portfolio investors remained net sellers at 1.2 lakh crore. A turnaround occurred in March due to easing interest rates and government tax incentives. Analysts anticipate continued foreign inflows and domestic investment, projecting a positive outlook for FY26.
The Indian rupee depreciated to 85.75 against the dollar on Monday, influenced by robust dollar demand from both foreign and domestic banks. Despite a weakening dollar index and gains in other Asian currencies, the rupee's decline was tempered by likely RBI intervention through state-run banks. The rupee traded within a narrow band, impacted by oil companies and importer demand.
