Posted on September 11, 2025 by Mumukshu Desai 
The past year has been one of the most eventful in recent memory for both the global economy and Indian equity markets. Global shifts, geopolitical challenges, and bold domestic reforms have shaped the path of our markets. Yet, amidst all the volatility, India’s story remains one of resilience and opportunity.
Global Shifts: “Buy China-Buy US”
In September 2024, China announced a $3.5 trillion stimulus package, which immediately diverted global capital flows towards Chinese equities available at attractive valuations. This triggered a wave of “Sell India–Buy China” trades.
Soon after, Donald Trump’s return to the White House in November 2024 boosted confidence in US markets, particularly Tech and AI sectors. Global allocations rushed into the US, leading to continued outflows from India and other emerging markets.
By January 2025, Trump’s focus on geopolitical tensions (Russia–Ukraine, Israel–Hamas) and his new tariff regime added fresh layers of uncertainty. India eventually faced 50% cumulative tariffs—a development that many saw as near-sanctions due to our imports of Russian oil.
Indian Resilience: Three Big Reforms in a Year
While global uncertainties were rising, India delivered powerful domestic reforms:
- Tax relief: Nil income tax up to ₹12 lakhs annual income, putting an estimated ₹1.2 lakh crore back into the hands of taxpayers.
- Monetary push: RBI cut interest rates sharply by 1%, signalling strong pro-growth intent.
- GST reforms: Rationalisation reduced compliance burden and lowered costs, boosting both consumption and business sentiment.
Together, these steps reflect the government’s clear focus on driving GDP growth and supporting domestic demand.
Market Dynamics: Domestic Investors Step Up
Despite heavy FII outflows of nearly – ₹3.75 lakh crore over the past year, Indian markets have displayed remarkable resilience.
- Mutual Fund SIPs are now at record highs of ₹27,000+ crore per month.
- Contributions in Equity Markets from EPFO, insurance funds, and retail investors have further stabilised the market.
- Even with such foreign selling pressure, the Sensex is only ~6% below its peak, while mid- and small-cap indices are down ~10–14%.
The Turning Point: From Resilience to Growth
The outlook is turning decisively positive:
- S&P upgraded India’s sovereign rating to BBB, recognising structural reforms and macro stability.
- Early signs of improved US–India trade dialogue are visible.
- Domestic consumption is rising, and valuations have corrected to fair levels from earlier expensive zones.
- With stability returning, FII inflows are expected to resume over the next 12–15 months.
What This Means for Investors
We are entering a phase where the market will be a “stock-pickers playground”—with frequent sectoral and thematic rotations. Active management will be the key differentiator in wealth creation.
This is the right time to increase equity allocation. We particularly see opportunities in: Multi Cap Funds, Mid Cap Funds & Small Cap Funds. A disciplined approach—through 6-month STPs or long-term SIPs—will help capture the next growth wave while managing volatility.
As interest rates from FDs & Bonds have fallen, investors seeking FD++ returns can look at Balanced Advantage Funds & Multi Asset Allocation Funds for stable and tax-efficient income via the SWP option from these funds.
Closing Note
At Artham FinoMetry, we remain deeply optimistic about India’s equity journey. The coming years present a rare opportunity to participate in India’s structural growth story. Together, let us stay invested, stay disciplined, and create long-term wealth.