Share Market Highlights 28 July 2025: Markets end lower amid banking, IT drag; Kotak Bank falls 7%

•Fixed Income

The New 10-Year Benchmark GOI 6.33 2035 traded between 6.29% – 6.36% during the week ending on 25th July 2025 (Closing yield: 6.3505%)

The Old 10-Year Benchmark GOI 6.79 2034 traded between 6.34% – 6.41% during the week ending on 25th July 2025 (Closing yield: 6.4009%) tracking movement involved around US Treasury, Currency and the announcement of VRRR auction.

•Auction Highlights

RBI conducted the Auction for G-sec, SDL, and T-bills for the aggregated amount of INR 36,000 crore, INR 10,750 Crore and INR 20,000 Crore, respectively.

G-sec Cutoff:

5.91% GS 2028: 100.27/5.8061%\u0009\u0009\u0009

6.33% GS 2035: 99.95/6.3352%

SDL Cutoff:

12 Years: BH 7.01%

15 Years: MN 7.10%\u0009

19 Years: WB 7.11%

20 Years: KL 7.10%

30 Years: TN 7.07%

Re-issue of 7.12% Maharashtra SGS 2047, issued on July 16, 2025 at 100.31/7.0917%

Re-issue of 7.13% Maharashtra SGS 2048, issued on July 16, 2025 at 100.34/7.0996%

Re-issue of 7.15% Maharashtra SGS 2049, issued on July 16, 2025 at 100.58/7.0991%

Re-issue of 7.16% Maharashtra SGS 2050, issued on July 16, 2025 at 100.74/7.0961%

T-Bill Cutoff:

091 Days: INR 9000 Crore 98.6747/5.3872%

182 Days: INR 6000 Crore 97.3170/5.5291%

364 Days: INR 5000 Crore 94.7375/5.5701%\u0009

•Commodities:

1)Brent Crude Oil: $68.00-$69.86 (Per barrel) (Closing: $67.66)

2)Gold: INR 1,00,885-INR 1,03,310 24 Carat (10 Gram)

3)Silver: INR 1,16,000-INR 1,19,000 (1 KG)

•Currency:

1)USD/INR: 85.733-86.244 ($) (Closing: 86.150)

•US Treasury Yield:

1)US 2 Years Treasury: 3.82%-3.93% (Closing: 3.917%)

2)US 5 Years Treasury: 3.87%-3.99% (Closing: 3.952%)

3)US 10 Years Treasury: 4.32%-4.44% (Closing: 4.386%)

•Corporate Bond Highlights

1)AAA 3 Years Bond traded between 6.68%-6.73% this week.

2)AAA 5 Years Bond traded between 6.75%-6.82% this week.

3)AAA 10 Years Bond traded between 7.05%-7.10% this week.

•News Highlights

INDIA

1)In June 2025, India’s eight core sector industries experienced a 1.7% growth, according to provisional data. This growth is a decrease compared to the 5% growth seen in June 2024. The eight core industries, which include coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity, account for 40.27% of India’s industrial output.

2)India’s foreign exchange reserves fell by $1.18 billion to $695.49 billion for the week ending July 18, 2025, according to RBI data. The decline was led by a $1.201 billion drop in foreign currency assets to $587.609 billion. Special Drawing Rights (SDRs) also fell by $119 million to $18.683 billion, and the reserve position with the IMF dipped by $13 million to $4.698 billion. However, gold reserves rose by $150 million to $84.499 billion during the same period.

3)Net FDI into India plummeted 98.2% to $40 million in May 2025 (from $2.2 billion in May 2024) due to higher repatriation/divestment at $5 billion (vs $4.1 billion) and increased outward FDI at $2.1 billion (vs $1.8 billion), while gross inflows fell to $7.2 billion (vs $8.1 billion). Key inflows came from Singapore, Mauritius, UAE, and the US, mainly into manufacturing, financial, and computer services. For April–May FY26, net FDI was steady at $3.9 billion, gross FDI rose to $15.91 billion, repatriations eased to $6.7 billion, and outward FDI surged to $5.3 billion, with top destinations including Mauritius, the US, and UAE.

4)India’s HSBC Flash Manufacturing PMI rose to 59.2 in July 2025 from 58.4 in June, signalling a stronger pace of expansion in factory activity driven by robust output and new orders. In contrast, the Services PMI eased to 59.8 from 60.4, indicating a slight moderation in service sector growth. Consequently, the Composite PMI, which captures overall private sector activity, dipped marginally to 60.7 from 61.0.

5)India and the UK signed a landmark Free Trade Agreement on Thursday, expected to boost bilateral trade by $34 billion annually. Under the deal, India will cut tariffs on 90% of UK goods, while the UK will eliminate duties on 99% of Indian exports, including key sectors like textiles, generic drugs, leather goods, agricultural products, and chemicals. The agreement will also ease UK exports of whisky, cars, and other goods to India, and is seen as India’s most significant trade pact to date, aimed at enhancing exports, investment flows, and economic cooperation.

6)As of July 11, 2025, total deposits (excluding banks) of all Scheduled Banks stood at ₹23.82 lakh crore, slightly down from ₹23.92 lakh crore on June 27, 2025, while bank credit (excluding interbank) was ₹189.31 lakh crore, marginally lower than ₹189.56 lakh crore in the previous fortnight. Investments rose to ₹68.77 lakh crore from ₹68.54 lakh crore, with government securities accounting for ₹68.67 lakh crore. RBI borrowings remained low at ₹1,223 crore. Food credit by Scheduled Commercial Banks declined to ₹58,992.85 crore from ₹64,388.73 crore, while Scheduled Co-operative Banks’ food credit was stable at ₹51,972.98 crore. The number of Scheduled Commercial Banks remained at 121.

7)The Asian Development Bank (ADB) has revised downwards India’s GDP growth forecast for the financial year 2025-26 (FY26) to 6.5 per cent from the earlier 6.7 per cent in its latest July 2025 report, primarily due to the effects of US tariff policies.

8)Gross NPAs of public sector banks declined significantly from 9.11% in March 2021 to 2.58% in March 2025, reflecting improved asset quality. The Ministry of Finance credited this to key reforms by the government and RBI, including the Insolvency and Bankruptcy Code (IBC), which has redefined borrower-creditor dynamics by removing defaulting promoters and covering personal guarantors. Legal amendments to the SARFAESI Act and the Recovery of Debts and Bankruptcy Act have also strengthened recovery processes. Additionally, the financial threshold for Debt Recovery Tribunals was raised from ₹10 lakh to ₹20 lakh to focus on high-value cases and enhance recovery efficiency.

9)As of July 11, 2025, aggregate deposits of Scheduled Commercial Banks stood at ₹233.26 lakh crore, falling by ₹99,909 crore fortnightly, with demand deposits down ₹2.7 lakh crore and time deposits up ₹1.7 lakh crore. Bank credit declined by ₹23,036 crore to ₹184.63 lakh crore, including a ₹5,396 crore drop in food credit and ₹17,641 crore fall in non-food credit. Money supply (M3) stood at ₹281.41 lakh crore, contracting ₹89,169 crore fortnightly but growing 3.1% in FY26 and 9.5% year-on-year. RBI loans to state governments rose ₹5,864 crore during the week to ₹26,294 crore. On the liquidity front, the RBI absorbed excess liquidity throughout the week, with net absorption peaking at ₹3.15 lakh crore on July 18 via the Standing Deposit Facility, reflecting ongoing monetary tightening.

10)RBI Governor Sanjay Malhotra, speaking at a banking summit by Financial Express in Mumbai on Friday, signaled room for further rate cuts ahead of the August 6 policy meet, though under a neutral stance the bar for easing remains high. With inflation at a six-year low and FY26 projections at 3.7%, he reaffirmed RBI’s focus on maintaining price stability while supporting growth. Malhotra said policy transmission is largely complete, boosting credit expansion. He also announced a new regulatory review cell to streamline banking rules, ruled out corporate banking licenses for now, and confirmed a forthcoming discussion paper on the flexible inflation targeting framework.

WORLD

1)In July 2025, the US S&P Global Flash Manufacturing PMI slipped to 49.5 from 52 in June, indicating a contraction in factory activity after two months of modest growth. In contrast, the Flash Services PMI climbed to 55.2 from 52.9, signaling continued strength in the services sector. The divergence reflects underlying resilience in consumer-driven services even as manufacturing faces headwinds from slowing demand and tighter financial conditions.

2)The US weekly jobless claims fell to 217,000 for the week ending July 19, down from 221,000 and below expectations, signaling continued resilience in the labor market. The seasonally adjusted insured unemployment rate held steady at 1.3%, while the four-week moving average declined by 5,000 to 224,500. However, continuing jobless claims edged up by 4,000 to 1.955 million for the week ending July 5, suggesting a slight uptick in longer-term unemployment despite the drop in new claims.

3)The European Central Bank (ECB) decided to hold all key interest rates steady during its July meeting, signifying the conclusion of its current easing cycle after eight consecutive interest rate cuts; the main refinancing rate stays at 2.15%, the lending rate remains at 2.40%, and the deposit facility rate continues to be held at 2.00%

4)The Eurozone economy showed modest improvement in July 2025, with all key flash PMIs edging higher. The HCOB Flash Manufacturing PMI inched up to 49.8 from 49.5 in June, remaining just below the 50-mark that separates contraction from expansion. Meanwhile, the Services PMI rose to 51.2 from 50.5, indicating expanding activity in the region’s dominant services sector. The Composite PMI, which combines manufacturing and services, also strengthened to 51 from 50.6.

5)The UK’s S&P Global/CIPS Flash PMIs for July 2025 show a mixed picture. The Manufacturing PMI rose to 48.2 from 47.7, exceeding expectations. The Services PMI, however, fell to 51.2 from 52.8, missing forecasts. The Composite PMI, reflecting both sectors, decreased to 51.0 from 52.0, remaining above the 50.0 no-change mark for the third consecutive month.

6)UK retail sales rebounded by 0.9% month-on-month in June 2025, following a sharp revised decline of 2.8% in May, according to the ONS. However, the recovery was weaker than the expected 1.2% rise. Core retail sales (excluding motor fuel) rose 0.6% MoM, also missing forecasts. On an annual basis, headline retail sales grew 1.7%, and core sales rose 1.8%, both improving from May’s declines but falling short of market expectations.

7)Japan’s economy showed a mixed trend in July 2025, with the Jibun Bank Flash Manufacturing PMI falling to 48.8 from 50.1 in June, signaling a contraction in factory activity. In contrast, the Services PMI improved to 53.0 from 51.7, reflecting stronger demand in the services sector. The Composite PMI held steady at 51.5, unchanged from the previous month, indicating that overall business activity remained in modest expansion. While manufacturing weakened due to sluggish external demand, the services sector continued to anchor growth, offering some stability amid global economic uncertainties.

8)Japan’s Core Consumer Price Index (CPI), monitored closely by the Bank of Japan (BoJ), has recorded a reduction to 2.3% in its latest year-over-year evaluation. This updated data, released on July 23, 2025, follows a previous rate of 2.5%, indicating a modest easing in inflation pressures.

9)Tokyo’s headline Consumer Price Index (CPI) rose 2.9% year-on-year in July, easing slightly from 3.1% in June, signaling a moderation in inflation. Core CPI, excluding fresh food, also slowed to 2.9%, just below the expected 3.0%, while the measure excluding both fresh food and energy matched this deceleration, down from 3.1%. The broad-based softening suggests inflationary pressures in Japan’s capital are cooling modestly, which may influence the Bank of Japan’s policy outlook.

10)The PBoC (People’s Bank of China) has maintained its Loan Prime Rates (LPRs) unchanged in July. The one-year LPR remains at 3.00%, and the over-five-year LPR stays at 3.50%, according to the National Interbank Funding Center (NIFC). These rates are effective until the next announcement.