Deloitte India projects India’s GDP growth rate at 6.5% to 6.8%, expecting momentum to pick up in the second half of the year driven by festive demand, central bank monetary easing, and stabilizing global conditions, even as geopolitical risks, currency fluctuations, and weather-related impacts pose challenges. At the same time, overseas Indians have deposited $17.41 billion into Indian banks under a concessional Foreign Currency Non-Resident window introduced by the Reserve Bank of India, bringing total inflows under the facility to $20.72 billion within 42 days. This inflow helped shore up India’s foreign exchange reserves, which rose by $1.08 billion to reach $676.24 billion for the week ending July 17, largely boosted by a $4.55 billion surge in Foreign Currency Assets. Addressing currency valuation in the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary reiterated that the Indian Rupee remains market-determined without any target level or band, with the central bank stepping in only to curb excess volatility and ensure orderly liquidity.

Meanwhile, industrial and domestic production indicators present a mixed economic picture. Under a newly revised series with a 2022–23 base year, India’s Index of Core Industries expanded 5.0% year-on-year in June, driven by strong gains in iron ore, electricity, and cement despite declines in fertilizers, crude oil, refinery products, and natural gas. However, overall private sector momentum has cooled sharply according to HSBC Flash India PMI data, with composite growth dropping to 54.3 and services business activity plunging to 53.1—its weakest expansion rate in 53 months—owing to competitive pressures, input costs, and order cancellations. Compounding domestic friction, new US trade policies targeting generic pharmaceuticals introduce a phased tariff framework, giving drugmakers a two-year transition window before escalating duties take effect, a move that particularly impacts Indian exporters who supply nearly half of all generic prescriptions in the United States.

These mixed signals are directly spilling into the stock market, where foreign institutional investors pulled out ₹11,729 crore while small direct investors sold ₹17,982.50 crore in July till date, reflecting growing caution over global trade duties and domestic slowdowns. Despite these heavy sell-offs, benchmark indices like the BSE Sensex held steady due to persistent buying by domestic institutional investors. DIIs remain under structural pressure to deploy cash into equities because of monthly Systematic Investment Plan inflows exceeding ₹31,000 crore alongside strict regulatory holding mandates. In contrast, small direct retail investors retain the flexibility to hold cash or shift to safer asset classes, creating a unique split between individual traders taking profits and retail SIP capital systematically driving institutional buying. NI