Equity Monthly for November 2025

Markets continued the rising trend in October with Sensex gaining 4.7%. BSE mid and small cap indices rose by 4.8% and 3.2% respectively. On the global front, the US (S&P 500 Index) continued its rising trend driven by technology and MSCI Emerging Market Index rose by 4.1%.

Source: Bloomberg; Data as of 31^st Oct 2025

Some of the key developments during the month were:

• The tax cuts along with pent up demand have translated into a good festive season. Consumer durable segments and auto companies have seen good sales volumes over the past month.
• Quarterly earnings season is progressing on expected lines, with a marginal pickup in growth trends.
• The US Fed cut the benchmark interest rate by another 25 bps, in line with expectations.
• The US President indicated the possibility of a trade deal with India. This would improve India’s export competitiveness of the country.

Table 1: Performance of Major Indices during the Month

Source: Bloomberg, Data as of 31^st October 2025
Past performance may or may not be sustained in the future.

Most of the recent sectoral gains corroborate with the recent quarterly results. Key sectoral trends in the recent earning season are:

• Volumes have picked up in consumption-based sectors, especially sectors like consumer durables and automobiles. Festive trends were encouraging across sectors.
• FMCG companies saw marginal impact on profits due to one-time adjustments on channel inventory due to recent GST tweaks.
• Margin pressure following rate cuts are mostly behind for banks. Credit growth has started improving, along with stable asset quality trends.
• Strong growth in Materials sector was majorly contributed by cement companies. Though profitability receded from recent peak due to a marginal decline in prices, it continues to be healthy and volume growth trends are reasonable.
• Most negatives seem to be factored in the IT sector. Steady deal wins indicate the possibility of a gradual improvement from here on. There were no negative surprises in the recent results. Indian service providers are re-aligning strategies to capitalize on the emerging Gen AI related opportunities.

The flows into equities remained resilient with major contribution from DII. (DII: Domestic Institutional Investors; YTD Flows: Foreign Portfolio Investors: - $ 16 bn (Outflow); DII: + $ 69.9 bn).

Table 2: Current Vs Historic Valuations of major indices

Source: Bloomberg; P/E: Price to Earnings; P/B: Price to Book; Data as of 31^st October 2025
Past performance may or may not be sustained in the future.

While the near-term economic trend is gradually recovering; valuations appear reasonable in pockets within the large cap space (Refer Table 2). The recent interest rate cuts, benign inflation, good monsoon and potential consumption boost from tax cuts and GST rationalization augurs well for the economy over the medium term. While current valuation levels may not offer potential for super normal returns, risk reward appears reasonable for a long-term investor.

Above article is authored by Quantum.

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