Market Overview – December 2025
The IMF projects global growth of 3.3% in 2026 and 3.2% in 2027, versus an estimated 3.3% in 2025.
Global economy
- The IMF projects global growth of 3.3% in 2026 and 3.2% in 2027, versus an estimated 3.3% in 2025.
- The 2026 forecast was revised modestly upward from October 2025 on stronger US momentum and robust growth in India.
- Technology and AI investment remains an important tailwind, particularly in North America and Asia.
- The US Fed held rates in January after a 25 bps cut in December, citing persistent inflation.
Indian economy
- The advance estimate places FY26 real GDP growth at 7.4%, led by services.
- The RBI cut the repo rate by 25 bps to 5.25% in December 2025 while maintaining a neutral stance.
- Sharp rupee depreciation and higher metal prices raise inflation risk.
- Budget 2026-27 assumes nominal GDP growth of ~10%, with capex sustained and defence spending stepped up.
Indian stock markets
- CY25 marked the tenth consecutive year of positive returns for Indian markets.
- The Nifty touched 26,326 in December 2025 but has consolidated between 24,000 and 26,000 for 9–10 months.
- Over the last 12 months small-caps fell 6%, while large-caps rose 11% and mid-caps 6%.
- FII outflows reached ~US$22 bn since January 2025, and the rupee depreciated ~6% against the dollar.
Corporate performance (Q3 FY26)
- Adjusted for labour-code provisioning, Nifty earnings grew 9% in Q3 FY26.
- Mid-cap earnings grew 20% and small-cap PAT 28%, a second consecutive double-digit quarter (12% in Q2, 18% in Q3).
- Autos, Cement, Capital Goods, Telecom, Metals, Oil & Gas and Financials beat expectations; IT, Chemicals, Real Estate and Energy lagged.
Outlook
- The interim India–US trade agreement and proposed India–EU FTA may ease FII concerns.
- We expect FII outflows to abate over the year, helping India retrace its underperformance.
- Improving earnings growth and upward revisions should command greater market weight.
- Current probabilities heavily favour Indian equities, especially small-caps.
Disclaimer. This overview reflects the views of the Care PMS investment team at the time of publication and is for information only. Investments in equities are subject to market risk. Past performance is not indicative of future returns. Please read the disclosure document carefully before investing.
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