Factsheet Index
Macro and
Equity Market
Outlook
GLOBAL MACRO & MARKETS
India’s NSE NIFTY index ended the month of May 2025 in green (+1.7%). Among major global indices, the S&P500 (+6.2%), the Morgan Stanley Capital International (MSCI) World (+5.7%), the Euro 50 (4.0%), the Japanese NIKKEI (+5.3%) ended the month of May 2025 with positive returns. Performance was positive among Emerging Market (EM) indices as well, with the Morgan Stanley Capital International Emerging Markets (MSCI EM), Hang Seng (Hong Kong), BOVESPA Brazil (BVSP) recording sequential returns of (+4.0%), (-5.3%), and (+1.5%) respectively.
The London Metals Exchange (LME) Metals Index rose (2.7%) in May 2025, as global trade tensions remained heightened. West Texas Intermediate (WTI) and Brent Crude rose MoM, by (+4.4%) and (+1.2%), respectively, as markets remained cautious given tariff fears and under supply concerns due to wildfires in Canada.
The Dollar index remained flat (-0.1%), through May 2025, with the US Dollar (USD) appreciating vis-à-vis Emerging Market (EM) currencies (+0.8%) and appreciation against the Indian Rupee (INR) on the spot market (+1.3%). India 10Y G-Sec yields fell by 6.8 bps, while US 10Y G-Sec yields rose by 23.9 bps, and the German Bund yield rose by 5.6 bps, with rates settling at 6.29%, 4.40% and 2.5%, respectively.
Domestic Macro & Markets
The BSE SENSEX (+1.5%) rose in May 2025, in line with the NSE NIFTY Index. The BSE Mid-cap index and the BSE Small-Cap index underperformed the BSE SENSEX, rising by (+6.1%), and (+8.7%) over the month of May 2025, respectively. Sector-wise, Capital Goods, Realty, and Metals were the top outperformers over the month of May 2025, clocking (+13%), (+7%), and (+6%), respectively. Except FMCG, all of BSE’s 12 remaining major sectoral indices ended the month May 2025 in green.
Net Foreign Institutional Investors (FII) flows into equities were positive for May 2025 (at +$1.57 Bn, following +$0.52 Bn in April 2025). Domestic Institutional Investors (DIIs) remained net buyers of Indian equities for the 21st consecutive month (+$7.92 Bn, from +$3.28 Bn last month, April 2025).
India's high frequency data update:
Record levels of Goods and Services (GST) collections, stable retail inflation, deflated input inflation, rising core sector outputs, and elevated credit growth augurs well for the Indian economy.
Purchasing Managers’ Index Manufacturing PMI:
India’s Manufacturing Purchasing Managers’ (PMI) in May 2025 fell to a three-month low of 57.6 (vs 58.2 in April 2025), remaining in expansion zone (>50) for the 45th straight month. Among the five major sub-indices, output remained strong, underpinned by both domestic and international demand. However, the pace of expansion declined to a three-month low in May 2025 from April 2025, with the firms surveyed citing the conflict as one of the reasons for the slower growth in the output index. The pace of expansion in new export orders also modestly declined but remained healthy driven by robust demand across regions.
Goods and Services Tax (GST) Collection:
Gross collections of INR 2.01 Tn (+16.4% YoY) in May 2025 concluded the thirty eighth consecutive month of collections over the INR 1.4 Tn mark, following previous record collections of INR 2.1 Tn in April 2024. Rising compliance, higher output prices, rising collections from imports and domestic transaction volume uptick has driven elevated tax collections.
Core Sector Production:
The index of eight core sector industries grew by 0.5% YoY in April 2025, against a 4.6% growth in March 2025. Five out of eight constituent segments grew YoY, driven by Cement production (6.7% YoY).
Industrial Production:
Factory output growth as measured by the Index of Industrial Production (IIP) decelerated MoM to +2.7% in April 2025, vs a growth of +3% YoY in March 2025, driven by growth in manufacturing sector at 3.4% followed by electricity at 1.1% and Mining at -0.2%.
Credit growth:
Scheduled Commercial Bank Credit growth slowed to 9.8% YoY as of 16th May 2025 against a YoY growth of 19.5% as observed in May 2024, as sector-wise credit in April 2025 slowed down in all sectors. Agriculture and allied activities credit rose by 9.2 %, lower than 19.8 % a year ago, while industrial sector credit grew by 6.6 per cent, down from 7.4 % in April 2024.
Inflation:
April’s Consumer Price Index (CPI) inflation rate decelerated MoM to 3.16%, down from 3.34% in March 2025. Food inflation came in at a slower pace MoM, at 1.78%, down from 2.69% in the previous month of March 2025. The Wholesale Price Index (WPI) inflation rose sequentially, albeit slower, in April 2025, with the print at 0.85%, 120 bps up from March 2025.
Trade Deficit:
India's merchandise imports were up 19.1% YoY to $64.91 billion in April 2025, while exports for the month of April 2025 were up 9.03% YoY to $38.49 billion, resulting in a sharp expansion of the merchandise trade deficit to $26.42 billion by 22.5% YoY.
Events to watch out for in June 2025:
Trade Related News flow:
Tariff news flow remains volatile with 90-day deadlines upcoming in July 2025. Tariffs will be monitored closely by the markets. Indian bilateral trade agreements to be watched.
Federal Open Market Committee (FOMC) Meet:
The Federal Open Market Committee’s (FOMC) last meet was held on May 6th–7th, 2025 where the Fed Funds Rate were kept unchanged at 4.25% to 4.5%. The minutes of this meeting showed internal concern over the effects of the Trade policy. The minutes also highlighted a risk of persistent inflation, a weakening labour market, and slowing economic growth. The next Federal Open Market Committee (FOMC) meeting will be held on June 17th–18th 2025. Economic high frequency data will be a key monitorable going into the Federal Open Market Committee (FOMC’s) meet.
Other things to watch out for:
Oil Market volatility with the Organization of the Petroleum Exporting Countries (OPEC+) increasing production, and Monsoon related news remain key events for markets to watch out for June 2025.
Monthly Performance for Key Indices:
Source: NIMF Research, Bloomberg .*Calendar year returns.

Note:Market scenarios are not reliable indicators for current or future performance. The same should not be construed as investment advice or as any research report/research recommendation
Past performance may or may not be sustained in future.
Market View
As of May 2025, the Indian equity market in the near-term continues to remain cautious however, the improvement from the domestic macros offers optimism. Overall, India’s macros are witnessing improvement with forex stability, liquidity support and capex revival, with consumption recovery and geopolitical risks being key variables
Markets have recovered from the sharp selloff in 1QCY25. Post the recent recovery, the valuations in mid and small caps continues to remain reasonably elevated and are currently trading at premium while in large caps are largely in line with the long-term averages (LTA).
Earnings season turned out to be better in 4QFY25. There were more companies where earnings for the quarters was above expectations versus those where earnings were below expectations. FMCG and IT services were key drags on India’s earnings.
Key sectors such as capital goods, private banks, and consumer discretionary are expected to benefit from ongoing structural reforms and increased government spending. The capital expenditure cycle is anticipated to continue, providing a potential foundation for future economic growth.
Valuations have again firmed up for the broader market after recent rally. Scope for rerating seems limited hereon and therefore market may track earnings trajectory for further gains.
Domestic market resilience can be attributed to the underlying domestic growth dynamics and estimated lower direct impact of tariffs. Larger recovery is likely in the festive season, unless some more disruption due to global and local issues.
Given the anticipated demand pick up we expect the muted earnings growth of last 2 quarters to improve. Some of the potential triggers for demand revival may include – rural/ agricultural recovery, lower interest rates, moderating inflation, tax benefits to the middle-income group, front loading of government spending etc
Large Cap & Large Cap oriented strategies along with hybrid funds appear better placed on risk-reward basis, while Mid/Small cap allocation may be considered in a staggered manner through systematic investment with a long term view.
Overall, we believe while the market may consolidate in the near term as the macro visibility improves even as the domestic fundamentals remain supportive and offer reasonable possibilities from a medium-term perspective.
Chart of the Month:
Interest rates (MIBOR) in India are falling sharply. Credit growth is weak, and demand for loans is low in the current market scenario. Rate-sensitive sectors should hold up well despite global headwinds. Fast transmission could drive a festive season recovery, especially in discretionary consumption and residential real estate. While corporate capex remains rate-insensitive, leveraged companies could benefit modestly.
Source:
NIMF Research, CEIC
Disclaimer:
The current fund philosophy may change in future depending on market conditions or fund manager’s views. The sectors mentioned are not a recommendation to buy/sell in the said sectors. The scheme may or may not have future position in the said sectors.
The information herein above is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsors, the Investment Manager, the Trustee or any of their directors, employees, Associates or representatives (‘entities & their Associate”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & the associates including persons involved in the preparation or issuance of this material, shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive, or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document

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