Indian Equity Market Outlook
During the month of July, the NIFTY 100 TRI gained nearly 2%. The NIFTY IT index was the clear outperformer, with an 18.98% gain. Foreign Institutional Investors (FIIs) turned net buyers of Indian equities after 4 months, with inflows of almost 2.3 billion USD.
From a valuation perspective, the overall Indian equity market is currently trading at a neutral zone compared with its historical averages.
Category | Current P/E | Historical Average P/E | Valuation View |
NIFTY Large Cap | 18.6x | 18.7x | Almost at par |
NIFTY Midcap | 27.8x | 24x | Slightly Overvalued |
NIFTY Small Cap | 23.3x | 17.5x | Slightly Overvalued |
Global Market Performance (1-Month, in INR Terms)
Market | Return |
Hang Seng (Hong Kong) | 13.01% |
Kospi (South Korea) | -34.01% |
Nasdaq (USA) | -6.99% |
Nikkei (Japan) | -11.70% |
Jakarta Composite Index (Indonesia) | 9.63% |
*Returns are based on data as of 30th July 2026
Debt Market Outlook
US 30-year bond rates crossed 5.20% at the end of July, signaling that the cost of funds may remain high for the long term and that global liquidity may remain tight.
The RBI projected Indian GDP to grow by 6.7% in FY27, with an inflation outlook of 5%. The RBI kept the repo rate unchanged at 5.25%, maintaining a neutral policy stance in its recently concluded monetary policy review.
As of end-July, $32 billion has been collected through the FCNR(B) deposit scheme, and $9 billion has flowed into government bonds after the withdrawal of capital gains tax on debt investments by FIIs. This inflow has ensured the 10-year Government Security (G-Sec) is expected to remain around 6.75%.
Bloomberg has deferred its decision to include Indian government bonds in the global aggregate index. Any future inclusion is expected to bring bond yields down by 10-25 basis points.
Future interest rate movements in India will depend on incoming inflation data and the US Fed's interest rate decisions.
Bullion Market Update
During July, the MCX Gold Index remained almost flat, while the MCX Silver Index fell by nearly 3.4%.
Key Monitorables
Oil prices, the US-Iran conflict, and the monsoon remain key factors to monitor. Investor sentiment related to AI-related investments may determine FII inflows and the direction of India's equity market in the short to medium term.
Investment Strategy
We recommend that investors allocate their portfolios based on their individual risk profile, financial goals, and investment horizon.
Asset Class | Recommended Weight |
Equity | Neutral Weight |
Debt | Neutral Weight |
Gold / Silver | Neutral Weight |
