Month: June 2025

India’s economy showed impressive strength in June, with business activity across manufacturing and services surging to a 14-month high, according to HSBC’s flash Purchasing Managers’ Index (PMI) survey, released on Monday.

The HSBC Flash Composite Output Index—an early estimate that tracks overall economic activity—jumped to 61 in June. That’s not only a sharp rise but also well above the 50-point threshold that separates growth from contraction. The index has now stayed in expansion territory for over three years.

Manufacturing Leads the Charge

The boost in business activity was driven primarily by the manufacturing sector. According to the survey compiled by S&P Global, both manufacturers and service providers saw increased output in June. Manufacturing growth reached its highest level in two months, while services hit a 10-month peak.

Strong demand, gains in efficiency, and investment in technology played a big role in the uptick, said survey participants.

Flash PMI Highlights:

• Composite Output Index: 61 (14-month high)
• Manufacturing PMI: 58.4 in June, up from 57.6 in May
• Services PMI: 60.7 in June, up from 58.8 in May
• Manufacturing Output Index: 61.5, up from 60.3

The PMI numbers reflect input from about 400 manufacturers and 400 service firms across the country.

Rising Orders, Hiring, and Export Demand

New business orders soared at the end of Q1 (April–June), with manufacturers seeing the sharpest increase. Export demand was particularly strong, with manufacturers reporting robust orders from regions including Asia, Europe, West Asia, and the Americas.

This surge in demand also led to increased hiring in the manufacturing sector. While job growth in services moderated slightly compared to May, it remained healthy.

“India’s flash PMI indicated strong growth in June,” said Pranjul Bhandari, Chief India Economist at HSBC. “New export orders continued to fuel private sector business activity, especially in manufacturing. Robust global demand and rising backlogs also encouraged manufacturers to hire more workers.”

Inflation Pressures Easing Slightly

Both input and output prices continued to rise for Indian firms, but the pace of inflation showed early signs of cooling. This could offer some relief to businesses concerned about rising costs.

Optimism for the Year Ahead

Despite some softening in overall business confidence—now at its lowest in just over two years—Indian companies remain broadly positive about the future. Manufacturers showed a slight uptick in optimism, while service providers were more cautious.

The final PMI report for June is expected early next month, but for now, the flash data paints a picture of a resilient and growing economy, powered by strong demand, improving productivity, and a healthy labour market.

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Indian equity markets bounced back strongly on Friday, putting an end to a three-day losing streak, as investors piled into financial, telecom, and tech stocks. A drop in global crude oil prices and renewed foreign institutional inflows added to the bullish sentiment.

Market Snapshot

• The BSE Sensex surged 1,046 points (1.29%) to close at 82,408.17, after rallying as much as 1,132 points during the session.
• The NSE Nifty 50 jumped 319 points (1.29%) to finish at 25,112.40.

The market rebound was largely driven by bargain hunting, following the recent correction. Declining crude prices globally also provided relief, easing concerns over inflation and fiscal pressure.

Top Gainers & Laggards

Among the top performers on the Sensex were:

• Bharti Airtel
• Nestle India
• Mahindra & Mahindra
• Power Grid
• Reliance Industries
• NTPC
• HDFC Bank

On the flip side, Axis Bank and Maruti Suzuki were the only notable laggards in an otherwise strong session.

Global Cues & Institutional Activity

• Brent crude, the global oil benchmark, fell 1.93% to $77.33 per barrel, offering a tailwind for oil-importing countries like India.
• Foreign Institutional Investors (FIIs) bought equities worth ₹934.62 crore, while Domestic Institutional Investors (DIIs) added another ₹605.97 crore, according to exchange data.

Currency Market Update

The Indian Rupee also strengthened, closing 14 paise higher at 86.59 against the US dollar, supported by strong equity market performance, FII inflows, and declining oil prices.

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Bottom Line: Markets bounced back with conviction, driven by sector-specific buying and easing global headwinds. All eyes will now be on upcoming macro data and global cues to determine if this rally has legs heading into the next week.

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Shares of key state-run project financing companies surged on Friday, June 20, after the Reserve Bank of India (RBI) released its much-awaited final guidelines for project finance—a move seen as far more lenient than the earlier draft.

Power Finance Corporation Ltd. (PFC) led the rally with gains of nearly 6%, while REC Ltd. rose 3.3%. HUDCO and IREDA also traded in the green, gaining around 3% and 1.5% respectively. Investors responded positively to the more favourable provisioning norms, which ease the regulatory burden on project financiers.

What’s New in the RBI’s Final Guidelines?

Under the new framework:

• For projects under construction, the Provision Coverage Ratio (PCR) has been set at:
  • 1% of total project cost.
  • 1.25% for under-construction Commercial Real Estate (CRE) projects.
• Once projects enter the operational phase, provisioning drops to:
  • 1% for CRE,
  • 0.75% for CRE + Residential Housing,
  • 0.4% for other types of project exposures.
• The RBI has also introduced a principle-based approach for resolving stress in project finance exposures.

These guidelines will come into effect from October 1, 2025.

A Positive Shift from Earlier Proposals

The final norms are significantly more lenient than the draft guidelines, which had proposed a steep 5% standard PCR (up from 0.4%) and a 2.5% PCR during the operational phase—scenarios that had sparked investor concern. Analysts had warned that such aggressive provisioning could hit the CET-1 capital of financiers like REC, PFC, and IREDA by 200–300 basis points.

Under the draft, NBFCs like REC and PFC were expected to absorb provisions through impairment reserves, potentially eroding regulatory capital without hitting the P&L. For banks, however, all provisioning would hit profits directly—an added burden.

CLSA: “The Real Tightening Is in the Disbursement Phase”

In a note, brokerage CLSA highlighted that the RBI has focused its tightening efforts on the loan disbursement process rather than provisioning. Now, before lenders release funds, all regulatory approvals and infrastructure clearances—such as right of way, power evacuation, and power purchase agreements (PPAs)—must be secured.

CLSA also noted that both PFC and REC have recently trimmed growth forecasts due to delays in approvals, indicating that while capital norms are now easier, execution challenges remain.

Still, the brokerage remains bullish, with a high-conviction “outperform” rating on both stocks, projecting 35% upside for PFC and 37% upside for REC.

Broader Sector Impact

The revised norms could also spark a reaction in PSU banks such as PNB, Central Bank of India, Indian Bank, Bank of Baroda, SBI, and Bank of Maharashtra, given their exposure to infrastructure lending.

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In a significant reshuffle of the benchmark Sensex index, retail powerhouse Trent Ltd. and public sector giant Bharat Electronics Ltd. (BEL) are set to be added to the 30-stock pack starting June 20. This update marks a strategic shift, as Nestle India Ltd. and IndusInd Bank Ltd. are scheduled to exit the index.

According to estimates by Nuvama Alternative & Quantitative Research, these changes are poised to trigger notable investment flows. Trent and BEL are expected to attract passive inflows of $330 million and $378 million, respectively. Conversely, Nestle India and IndusInd Bank’s removal could lead to outflows of around $230 million and $145 million.

“Historically, stocks added to the Sensex tend to witness strong intraday performance, buoyed by increased trading volumes,” Nuvama noted, hinting at a possible repeat of this pattern.

UltraTech Cement Gains Weightage

In terms of weightage adjustments within the index, UltraTech Cement stands out as the only stock set to see a rise in its Sensex weight, drawing in $4 million in passive flows. On the flip side, several index heavyweights—including HDFC Bank, Reliance Industries, Infosys, and TCS—are expected to face reduced allocations, collectively resulting in $249 million in outflows.

Broader Index Changes: BSE 100, Sensex 50 & Next 50

The rebalancing extends beyond the Sensex:

• BSE 100: Dixon Technologies, Coforge Ltd, and Indus Towers Ltd will join the index, replacing Bharat Forge, Dabur India, and Siemens Ltd.
• BSE Sensex 50: InterGlobe Aviation Ltd (IndiGo) and Shriram Finance Ltd will be included, while Britannia Industries and Hero MotoCorp Ltd make their exit.
• BSE Sensex Next 50: Reflecting the shifts in other indices, Britannia, Dixon Technologies, Coforge, Hero MotoCorp, and Indus Towers will be added. InterGlobe Aviation, Shriram Finance, Bharat Forge, Dabur India, and Siemens will move out.

These updates are part of the semi-annual index rejig process and aim to ensure that the indices better represent the evolving dynamics of India’s equity markets. Investors, especially those tracking passive funds, will be closely watching the impact as these changes go live.

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Kalyan Jewellers India Ltd., one of India’s largest jewelry retailers, may be witnessing strong business momentum — but the stock is currently struggling on Dalal Street.

As of Thursday, June 19, the stock was trading 1.07% lower at ₹514.35, having corrected nearly 35% from its January 2025 high of ₹795.40. Year-to-date, the stock is down 34%, despite upbeat earnings and an aggressive expansion roadmap.

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📊 Citi Maintains ‘Buy’ Rating — Sees ₹650 Target

Global brokerage Citi has reiterated a ‘Buy’ rating on the stock, setting a target price of ₹650, implying over 25% upside from current levels.

In its latest research note, Citi highlighted:

• Robust demand trends continue across the jewelry segment
• 90 new stores are planned in FY26, indicating strong growth confidence
• Online arm Candere could turn profitable or break even this fiscal
• Studded jewelry mix remains stable, aiding margins
• No significant price-based competition, despite high gold prices
• Average ticket size has increased by <10%, suggesting pricing discipline

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💰 Financial Highlights: Solid March Quarter Performance

Kalyan Jewellers reported a strong Q4 FY25, with both revenue and profit rising sharply:

Metric	Q4 FY25	YoY Change
Revenue	₹6,181.5 crore	🔼 36.6%
Net Profit	₹187.6 crore	🔼 36.5%
EBITDA	₹399 crore	🔼 34.8%
EBITDA Margin	6.5%	🔽 10 bps YoY

Despite the slight margin dip, the company’s bottom-line growth remains healthy, underpinned by rising same-store sales, largely driven by customer base expansion, not just ticket size inflation.

Kalyan has also proposed a final dividend of ₹1.50 per share for FY25, rewarding shareholders even as it works to reduce its ₹350 crore debt in FY26.

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🧭 Outlook: Opportunity Amid Correction?

While the stock has seen a steep decline from its highs, Kalyan Jewellers’ fundamentals remain strong, with:

• Clear growth visibility
• Solid financial performance
• Focused debt reduction
• Expanding omnichannel presence

The recent correction may reflect broader market volatility or profit-booking, rather than business weakness. For long-term investors, this could be an opportunity to accumulate on dips, especially with strong institutional backing and analyst support.

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