Topic 1: EQUITY MARKETS: DELICATE BALANCE

In November 2025, the Indian equity markets continued their upward trajectory, marking the third consecutive month of gains. The Nifty 50 rose by approximately 1.87% during the month, while the BSE Sensex also posted modest gains, oscillating around the 85,000–86,000 range. Despite intermittent volatility and foreign investor selling pressure, domestic institutional support, strong economic data, and sectoral outperformance—especially in technology and healthcare—helped sustain overall market strength. The Sensex touched intraday highs above 86,000 in mid-November before settling slightly lower by month-end. Market breadth remained positive but weaker than in October, with 30 advancing stocks versus 20 declining stocks on the Nifty, resulting in an advance-decline ratio of 1.5. In the final week of November (ending on the 28th), the Sensex gained around 0.56%, reflecting resilience despite turbulence in global and domestic cues.

Technology emerged as the strongest-performing sector with a weighted return of 4.53%, driven by gains in firms such as Tech Mahindra, HCL Technologies, and Infosys. Healthcare also delivered impressive performance at 4.16%, benefiting from defensive positioning and stable demand. The energy sector gained around 3.49%, lending additional support to broader indices. In contrast, utilities proved to be the biggest underperformer, falling by 3.85%. This decline was driven by weakness in heavyweight stocks such as Power Grid and NTPC, which were affected by softer power demand and operational pressures. Consumer defensive stocks also slipped by 1.95%, reflecting subdued sentiment around staple goods and cautious consumer spending patterns.

Foreign Institutional Investors (FIIs) emerged as net sellers in November, pulling out approximately ₹12,500 crore from Indian equity markets in the secondary segment. This outflow was primarily due to global portfolio rebalancing towards AI-driven rallies in markets such as the United States, China, and South Korea. There were significant days of FII selling, including net outflows of ₹4,171 crore on November 24 and ₹1,255 crore on November 27. Although there were some instances of buying (e.g., ₹4,581 crore on November 7), the overall monthly trend was negative. However, Domestic Institutional Investors (DIIs) effectively counterbalanced the impact of this selling. Indian mutual funds, insurance companies, and pension funds injected approximately ₹16,600 crore into equities, fuelled by consistent SIP inflows and rising retail participation. Over the broader period, DIIs invested nearly ₹77,083 crore (around $8.7 billion), marking approximately 28 consecutive months of net buying. This sustained influx not only stabilized the market but also elevated DII holdings above FII holdings for the first time in recent history. Domestic buying was concentrated in sectors such as financial services, FMCG, technology, and healthcare.

Interestingly, while FIIs were net sellers in the secondary market, they remained active in the primary market. Their investments in IPOs totalled around ₹10,700 crore, making November the second-highest monthly FII inflow in primary markets for 2025. This highlights continued long-term confidence in India’s structural growth story despite short-term volatility in stock prices.

Internationally, equity markets experienced turbulence early in the month. Global technology stocks underwent a sharp correction, with the Nasdaq Composite falling nearly 3% in the first week of November. Asian markets, including Japan’s Nikkei and South Korea’s KOSPI, dropped around 5% each, while European markets weakened as well. This selloff was primarily driven by high valuations and concerns over stretched profit expectations related to artificial intelligence investments. As a result, developed market equities fell about 1.3% during this phase. The longest U.S. government shutdown in history — lasting 43 days — ended in mid-November. However, it left behind uncertainty regarding economic data flow, growth projections, and potential Federal Reserve decisions. These concerns led to flat global equity returns for the month, with developed markets posting gains of just 0.3%. Investors rotated into defensive sectors such as healthcare and consumer staples. Adding to the pressure, China’s October trade data revealed a decline in exports, heightening concerns over weak global demand and insufficient stimulus measures. This weighed on commodity prices and emerging markets that are closely tied to Chinese demand. Geopolitical tensions also persisted, along with falling energy prices and a strengthening U.S. dollar. These factors increased safe-haven demand, easing U.S. Treasury yields but weakening emerging market currencies. Fiscal uncertainties—especially UK budget issues and concerns over U.S. tariffs—further unsettled global bond and equity markets toward the end of the month. Despite global headwinds, India showed strong macroeconomic resilience. Q2 GDP growth surprised on the upside, coming in at 8.2%, significantly above expectations. This boosted investor confidence, especially in sectors such as financials and information technology. Strong corporate earnings, including major deals such as TCS’s SAP contract, reinforced positive sentiment. Mid-cap and small-cap companies posted profit-after-tax growth of 27–37% year-on-year, adding to the optimism in the broader market. Another key support factor was the indication by the Reserve Bank of India of a possible interest rate cut. With October CPI inflation at just 0.3%, expectations grew of a policy rate reduction to around 5.25% in December. This outlook benefited interest-rate sensitive sectors like banking and automobiles and supported the broader indices’ gains.

In conclusion, November 2025 reflected a delicate balance between global uncertainty and domestic strength. Although FIIs withdrew capital from Indian equities and international markets remained volatile due to technology corrections, geopolitical issues, and weak trade data from China, the Indian market held firm. Strong GDP growth, RBI’s accommodative signals, robust corporate earnings, and record domestic inflows ensured that both Nifty and Sensex closed the month in positive territory. By early December, the Sensex had even extended its gains, reaching 85,712 and reflecting a 2.88% upward movement into the new period. This underlined India’s relative resilience in a challenging global environment.