1. Inflation Plunges to Record Low, Rate Cut Hopes Rise
• Retail Inflation (CPI): India’s retail inflation in October 2025 dropped sharply to a record low of 0.25% 📉 (the lowest since the current series began). This is mainly due to a significant fall in food prices 🍅🧅 and the positive effect of recent GST rate rationalization.
• Monetary Policy: The subdued inflation has sparked strong speculation about a potential 25 basis point rate cut ✂️ by the Reserve Bank of India (RBI) in the upcoming December Monetary Policy Committee (MPC) meeting.
2. Strong Growth Forecasts & Global Resilience
• GDP Estimates: India Ratings & Research (Ind-Ra) projects India’s GDP to have expanded by a robust 7.2% in the second quarter (July–September) of FY26. This growth is primarily fueled by strong private consumption 🛍️ and the resilient services sector.
• Global Outlook: Moody’s Ratings projects India’s economy will grow at 6.5% through 2027 🚀, driven by consistent infrastructure spending and consumption. Separately, UBS forecasts India will become the world’s third-largest economy by 2028 🥉. The World Bank also recently called India the “fastest-growing large economy.”
3. Capital Market Trends: DII vs. FII Dynamics
• Foreign Institutional Investors (FIIs): FIIs continue to be net sellers, pulling out capital from Indian equities, pushing foreign ownership to its lowest level in over a decade 📉.
• Domestic Institutional Investors (DIIs): This outflow has been overwhelmingly absorbed by the “unstoppable surge” of domestic mutual funds (DIIs) 💰, whose ownership is now at a record high, lending stability to the market.
4. Key Policy and Sectoral Developments
• Exports: Mobile phone exports 📱 hit a record high of $2.4 billion in October, contributing to a nearly 50% year-on-year increase in overall mobile exports for the fiscal year.
• Employment: Festive season hiring saw a significant 17% year-on-year increase in 2025, driven by a surge in gig and temporary jobs 🧑💻 in retail, e-commerce, and logistics sectors.
• Export Mission: The Union Cabinet approved a ₹45,060 crore outlay for the Export Promotion Mission 🚢 to strengthen export competitiveness for MSMEs and diversify into new markets, including a new Credit Guarantee Scheme for Exporters (CGSE).
