Last Week: July 14–25, 2025
By Hitender Tanwar – Authorised Business Partner, Motilal Oswal
1. Executive Summary
Last week, Indian equity markets saw heightened volatility and witnessed their fifth consecutive weekly decline. Key drivers included sustained FII selling, volatile crude oil and currency movements, divergent corporate earnings, and rising macro uncertainties. Still, domestic institutions continued to provide crucial buffer support. As we move into the week of July 28–August 1, attention shifts to upcoming earnings results, global cues, currency & crude trends, and persistent FII/DII flows.
2. Market Performance at a Glance
Nifty 50 slipped below the key 24,900 level. Sensex declined over 550 points on Friday, led by weakness in Reliance, Infosys, and the Bajaj Twins. Broader markets also saw selling pressure, though small- and mid-cap segments held up marginally better amid selective defensive positioning.
Despite positive mid-week cues from HDFC Bank and ICICI Bank results, the overall sentiment remained cautious and risk-averse.
3. FII & DII Flow Dynamics
Institutional activity remained central to market direction:
Cash segment net flows (₹ crore)
July 11 to July 25 based on NSE/BSE data :
July 17: FII –3,694 / DII +2,820 July 16: FII –1,858 / DII +1,223 July 15: FII –1,614 / DII +1,555 July 11: FII –5,104 / DII +3,559
Key takeaways:
FIIs collectively sold over ₹10,000 cr between July 12–17, reinforcing a bearish posture . DIIs remained net buyers, contributing ₹2,000–₹3,500 cr daily, helping to stabilize markets. Year‑to‑date, FIIs have withdrawn approximately ₹79,300 cr (~USD 9.2 bn), though selectively increasing exposure to finance and telecom sectors .
Notably, DII flows in 2025 have surpassed ₹3 lakh crore, second only to the all‑time high of ₹5.23 lakh crore in 2024 .
4. Derivatives & Sentiment Indicators
FIIs expanded bearish derivative positioning, raising concentration at put strikes and signaling increased hedging. Technical data shows rising Nifty open interest at 25,200–26,500 call strikes, while liquidity flow and skew suggest caution .
Meanwhile, India VIX, a measure of market volatility, slipped to low‑teens, indicating temporary easing in fear levels—but correlation with currency movement rose. The 30‑day correlation between the Rupee and Nifty has climbed to 0.66, highest since mid‑May, reflecting heightened sensitivity between equity and FX markets .
5. Macro Trends: Currency & Commodity Flows
🎯 Crude Oil & Inflation Pressure
Brent crude climbed sharply over the week—trading near the $69–70/bbl range—raising inflation concerns and weighing on import-dependent sectors like FMCG, aviation, and OMCs.
💱 Rupee Dynamics
The INR depreciated to ₹86.52/$, weakening further toward ₹86.70–₹86.80 as dollar strength and outflows intensified . Foreign selling in July has exceeded $500 million, with July 23 alone seeing net equity outflows of $382M and $41.7M in bonds . Trend remains one of capital flight and dollar demand, amid fading hope of a U.S.–India trade breakthrough before the August 1 deadline.
6. Corporate Earnings Recap & Sector Trends
🏦 Key Banking Results
HDFC Bank and ICICI Bank delivered strong Q1 earnings, with healthy loan growth, improving asset quality, and resilient margins—providing mid-week support to indices .
🛢️ Mixed Performance: Reliance & Infosys
Reliance Industries lagged due to weaker margins in its O2C and retail operations. Infosys cited tech demand softness, resulting in margin pressures. This divergence amplified the underperformance of large-cap heavyweights.
🏛️ Domestic Institutional Behavior: The Adani Case
During Q2, LIC and mutual funds increased positions in Adani Group stocks, while FIIs scaled back—highlighting a sharp basis of divergence between local confidence and foreign caution .
7. Sectoral Watch: Opportunities & Risks
Financials & Telecom continue to attract selective FII interest, aligning with long-term growth themes despite broader withdrawal . Defensive sectors like FMCG and healthcare remain stable but underperforming in risk-off trades. Mid- and small-caps have shown selective resilience owing to domestic and retail investor flows.
8. What Lies Ahead: Triggers to Watch (July 28–August 1)
🔸 Corporate Earnings
Results from Axis Bank, Maruti Suzuki, and other sector leaders will be key to gauge Q1 momentum. Any positive surprises could ease valuation concerns.
🔸 Global Market Cues
Key events include the U.S. Federal Reserve policy update, GDP data, and tariff decisions by the U.S. government—especially around the August 1 U.S.–India tariff deadline.
🔸 Crude & FX Movements
Sustained crude prices and further INR weakness would likely pressure inflation expectations and impact rate-sensitive sectors.
🔸 Institutional Flows
Watch whether FIIs will pause or reverse net selling, or maintain bearish derivative stances. DIIs may continue their support, especially in large caps.
🔸 Technical Resistance & Support Levels
Derivatives price banding suggests resistance near 25,200–25,500 and support around the 24,800 level on Nifty .
9. Investor Strategy & Perspective
In volatile times, here’s a calibrated approach:
✅ Focus on quality businesses with strong earnings resilience. ✅ Use SIP and systematic buys to capitalize on dips. ✅ Maintain sector diversification, emphasizing financials, telecom, and consumer staples. ✅ Be valuation-aware—let strong Q1 results justify upgrades. ✅ Track domestic and retail participation trends—steady DII inflows remain critical.
As emphasized by Kotak’s equity research head, Shrikant Chouhan, selectivity and bottom-up fundamental investing are more important now than broad liquidity plays—particularly with SIP contributions crossing ₹27,000 cr in H1 2025 .
10. Key Takeaways
Theme
Summary
FII Behaviour
Aggressive sellers, ~₹10,000 cr exit mid-July; ~₹79,300 cr withdrawn YTD
DII Support
Consistent net buyers, ₹2–3k cr/day absorbing, cumulatively ~₹3‑3.2 lakh cr in 2025
Macro Pressures
Elevated crude, rupee depreciation, global uncertainty
Equity Narrative
Mixed Q1 earnings; Banks resilient, Large caps under stress
Outlook
Defence bias with pockets of selective opportunity via Q1 triggers & derivatives positioning
11. Closing Thoughts
Indian equity markets are exhibiting fragile optimism. While FIIs are partly exiting, DIIs along with retail flows are anchoring structural stability. Crude and currency volatility remain immediate risk areas—but strong earnings and fiscal-engineering from banks and telecom may offer resilience.
As the market navigates corporate results and external data flow, breadth of recovery and conviction will depend on institutional sentiment shifts and macro stability.
📞 Need Personalized Market Insights?
Reach out for strategic guidance, portfolio reviews, or account opening:
Hitender Tanwar
Authorised Business Partner, Motilal Oswal Financial Services Ltd.
📲 +91 9810685229 | 💬 WhatsApp: +91 76830 95302 | ✉️ hitender@gmail.com
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Disclaimer: This blog is for informational purposes only; not investment advice. Consult a licensed advisor for financial decisions.
