Economy and regulatory updates
- India’s core sector output eased 2% in July 2025. It had expanded 2.2% in June 2025.
- HSBC Flash India Manufacturing PMI rose to 59.8 in August 2025 from 59.1 in July 2025, while the Flash India Services PMI rose to 65.6 from 60.5 and the Flash India Composite PMI jumped to 65.2 from 61.1.
- S&P raised India’s rating to BBB from BBB- with stable outlook. This reflects India’s strong economic growth and better monetary policy.
- Prime Minister Narendra Modi has announced that the government will roll out next-generation Goods and Services Tax (GST) reforms by Diwali that would lower taxes on items of daily use.
- The Rajya Sabha approved a motion for reference of three Bills to a Joint Committee of Parliament, including one that proposes that the prime minister, chief ministers and ministers can be removed from office if they are arrested and detained for 30 days for certain offences.
- Parliament clears Bill to set up the 22nd Indian Institute of Management (IIM), which will come up in Guwahati, with Rs 555 crore.
- The government has disbursed Rs 21,689 crore under the production linked incentive (PLI) schemes for 12 sectors, including electronics and pharma, since the launch of the support measure to boost domestic manufacturing.
- The Governor of the Reserve Bank of India (RBI), Sanjay Malhotra, said the global economy continues to traverse a period of heightened uncertainty on account of trade and tariff negotiations and lingering geopolitical tensions.
- RBI Governor Sanjay Malhotra said the central bank needs to remain watchful as the uncertainties of tariffs are still evolving, while voting for a status quo on key interest rate earlier this month.
- The Chairperson of the Securities and Exchange Board of India (SEBI), Tuhin Kanta Pandey, said they are looking to improve the tenure and maturity of equity derivatives products in a calibrated manner.
- SEBI Chairperson Tuhin Kanta Pandey suggested introducing a regulated platform for pre-initial public offering (IPO) share trading, potentially replacing grey market operations.
- SEBI proposed lowering the minimum dilution requirement for mega IPOs.
Domestic macroeconomic indicators
Indian debt market update
- The interbank call money rate ended lower at 4.95% in the week ended August 22 from 5.10% in the week ended August 14.
- Government bond prices ended lower in the week ended August 22. The yield of the 10-year benchmark 6.33% 2035 paper closed at 6.55% on August 22 compared with 6.48% on August 14.
- Bond prices fell following Prime Minister’s announcement over GST.
- The Prime Minister’s promise of major overhauls to the GST, effectively lowering prices on daily essentials and electronics from October, triggered concerns that the reform could widen federal and state budget deficits and lead to higher debt supply.
- In the weekly debt sale held on August 22, the RBI auctioned 5.91% GS (government security) 2028 and 6.33% GS 2035 for a total notified amount of Rs 36,000 crore.
Indian debt market indicators
India yield curve shift (%) (W-o-W)*
Indian equity market updates
- Indian equity ended higher this week, on optimism over GST reforms, easing oil concerns, progress in peace talks in Europe, and the S&P rating upgrade. However, some investors were cautious ahead of US Federal Reserve Chair Jerome Powell’s speech, new US tariff deadlines and persistent foreign fund outflows. The BSE Sensex and Nifty 50 rose 0.88% and 0.97%, respectively.
- Almost all the sectors ended higher. Auto, realty and consumer durables (CD) gained the most. The BSE Auto, BSE Realty and BSE CD rose 5.07%, 3.43% and 2.73%, respectively.
- The domestic market bought Rs 65,778 crores worth of equities till August 21, 2025, compared with Rs 56,475 crores worth of equities till August 15, 2025.
- Foreign institutional investors sold equities worth Rs 31,526 cr till August 14, 2025 compared with selling of Rs 29,047 crores till August 15, 2025.
Indian equity Indices
Global Equity market summary
- US stocks ended lower during this week amid expectations of hawkish remarks by the Federal Reserve chair at the Jackson Hole Economic Policy Symposium. Stocks were also pulled down by a decline in technology stocks and caution as investors awaited earnings from major retailers. However, a rise in healthcare and consumer staples stocks limited the losses.
- Britain's FTSE index ended higher this week supported by sector-specific gains and optimism over a potential peace deal in Europe. The uptrend was also driven by strong services PMI data that indicated resilience in the UK economy.
- Japan's Nikkei index ended lower this week due to profit-booking at a higher level. Additionally, a decline in technology and chip-related stocks led to further losses.
- However, some gains were witnessed as a weaker yen prompted a rally in automobile stocks.
- Hong Kong's Hang Seng Index ended higher during this week as China foreign ministry’s commentary indicated progress in the US-China trade deal. However, as investors were cautious ahead of the Federal Reserve’s Jackson Hole meeting, limiting the gains.
- China's Shanghai Composite Index closed higher during this week supported by abundant liquidity and sustained optimism over US-China trade negotiations.
Global equity benchmark indices’ returns
Global Yield
- US Treasury prices were flat during the week as investors are bracing for the annual Jackson Hole Economic Policy Symposium.
- Bond prices were flat as investors remained on the edge, with the focus being on the Federal Reserve’s interest rate outlook. The minutes of the Federal Reserve’s latest monetary policy meeting showed that most officials in the Fed's interest-rate setting committee still see the upside risk to inflation as the bigger threat to economic outlook, although a couple were more worried about the downside risk to employment.
- The yield on the 10-year benchmark Treasury bond ended at 4.33% on August 21 from 4.33% on August 15
Major global bond yields
Commodities and Currency
- Crude oil prices rose marginally due to a fall in US crude oil inventories and as investors awaited the progress of the peace talks in Europe.
- Gold prices ended lower this week due to profit-booking at higher level amid easing geopolitical and trade uncertainties.
- The rupee closed higher against the US dollar this week on optimism over GST reforms, easing oil prices, dollar selling by foreign banks and gains in domestic equity market. However, some losses were seen at the end of the week, ahead of Fed Chair Powell’s speech.
Commodity prices
Other currencies vs the rupee
Global Economic
- US Industrial production rose by 1.4% in July 2025, compared to upwardly revised 0.8% in June 2025.
- The Eurozone economy expanded 1.4% year-on-year in the second quarter of 2025, slightly lower than 1.5% in Q1.
- Eurozone headline annual inflation rate was unchanged at 2% in July of 2025 from the prior month while the annual core inflation rate steadied at 2.3% in July 2025, the same as in each of the previous two months.
- UK annual inflation rate jumped to 3.8% in July 2025, compared to 3.6% in June 2025 while the annual core inflation rate edged up to 3.8% from 3.7%.
- UK GDP grew 1.2% on year in Q2 2025 easing slightly from 1.3% in Q1 while it grew 0.3% on quarter from 0.7% in earlier quarter.
- The People’s Bank of China (PBOC) maintained key lending rates at record lows for the third consecutive month during the August fixing. The one-year Loan Prime Rate (LPR)—the benchmark for most corporate and household loans—was kept steady at 3.0%, while the five-year LPR, which guides mortgage rates, remained unchanged at 3.5%.
- Japan's annual inflation rate eased to 3.1% in July 2025 from 3.3% in the previous month while core inflation rose 3.1% from 3.3%.
- Japanese economy advanced 1.0% in Q2 2025, compared to 0.6% in the prior quarter.
Macro indicators
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