India Financial Market Weekly Review: June 8-15, 2025
In-Depth Sectoral Rotation Analysis
Here’s what we discuss in this in-depth long-form weekly update:
Sectoral Trends: IT, realty, auto (two-wheelers/SUVs), and healthcare showed improving momentum, while PSU banks and CPSEs faced consolidation after strong runs.
Market Dynamics: Indian markets faced a tug-of-war between positive domestic policy moves and global geopolitical shocks, with a late-week risk-off wave erasing earlier gains.
RBI’s Dovish Pivot: A surprise 50 bps repo rate cut to 5.50% and a phased CRR reduction signaled easing, boosting rate-sensitive sectors like banking initially.
Inflation at Six-Year Low: May 2025 CPI inflation dropped to 2.82%, driven by falling food prices, supporting RBI’s dovish stance.
Geopolitical Shock: Israeli strikes on Iran on June 13 triggered a global risk-off mood, with Brent crude surging over 9% and gold crossing ₹1,00,000 per 10 grams in India.
Market Impact: Nifty 50 and Sensex faced heavy selling pressure on Friday, reflecting India’s vulnerability to global risk sentiment despite strong domestic fundamentals.
Currency & Bonds: INR weakened to ₹86.09, and 10-year bond yields hit a five-week high of 6.3192% due to rising oil prices and FII selling.
Key Risks: Escalating Middle East tensions, global economic slowdown, and monsoon performance could disrupt India’s growth trajectory.
The markets last week were caught in a classic tug-of-war between encouraging domestic policy developments and severe global headwinds. The week began with optimism stemming from the Reserve Bank of India's (RBI) surprisingly dovish monetary policy actions.
However, this positive sentiment was swiftly and decisively overshadowed by a significant risk-off wave that swept across global markets on Friday, triggered by a sharp escalation in geopolitical tensions in the Middle East. Both Nifty 50 and Sensex which had oscillated in a range-bound manner for most of the week, succumbed to heavy selling pressure in the final sessions.
The primary catalyst for the market downturn was the geopolitical shock on Friday, June 13, following reports of Israeli military strikes on Iran. This event triggered an immediate flight to safety across global assets. Consequently, commodity markets experienced extreme volatility. Brent crude oil prices surged by over 9% in a single day, nearing $77 per barrel, while the safe-haven asset, gold, rallied significantly, with domestic prices crossing the ₹1,00,000 per 10-gram mark.
The events of the week brought a critical dynamic into sharp focus: a growing disconnect between India's improving domestic macroeconomic landscape and its inherent vulnerability to global shocks.