Economy and regulatory updates
- India’s wholesale prices fell 0.32% on-year in November compared with 1.21% in October.
- India’s merchandise trade deficit narrowed to $24.53 billion in November, as exports grew at their fastest pace, while imports slowed to a three-month low, led by a sharp fall in gold imports.
- India proposed a preferential trade agreement with Mexico to help domestic exporters deal with the steep tariffs announced by them.
- India’s unemployment rate slipped to 4.7% in November compared with 5.2% in October.
- HSBC Flash India Manufacturing PMI eased to 55.7 in December from 56.6 in November, while Services PMI fell to 59.1 from 59.8. The HSBC Flash Composite PMI declined to 58.9 from 59.7.
- India and Oman approved a Comprehensive Economic Partnership Agreement, a free trade agreement expected to deepen economic ties and boost trade.
- India has eased extra scrutiny to clear China business visas within four weeks.
- The Cabinet has approved the Atomic Energy Bill, 2025, named SHANTI.
- Union Finance Minister Nirmala Sitharaman introduced the Securities Market Code Bill, 2025, in the Lok Sabha.
- The Centre approved renaming MGNREGA, India's flagship rural employment scheme to Pujya Bapu Gramin Rozgar Yojana.
- The Cabinet cleared a budget of Rs 11,718.24 crore for Census 2027.
- Securities and Exchange Board of India (SEBI) revised the mutual fund (MF) expense ratio framework and approved a comprehensive overhaul of the three-decade-old SEBI MF Regulations, 1996.
- SEBI allowed zero-coupon bonds to be issued in reduced denominations of Rs 10,000 by modifying the conditions under which issuers can lower the face value of non-convertible debt securities and non-convertible redeemable preference shares issued through private placement.
- Pension Fund Regulatory and Development Authority issued an important communication for National Pension System subscribers, who had chosen Scheme A under Tier I (Active Choice).
Domestic macroeconomic indicators
Source: MOSPI, RBI
Indian debt market update
- The interbank call money rate ended lower at 5.00% on December 19 compared to 5.20% on December 12.
- Government bond prices ended flat in the week ended December 19 and the yield on the 10-year benchmark 6.33% 2035 paper closed at 6.61% on December 19 compared to 6.61% on December 12.
- Bond prices ended flat as supply concerns and weak auction demand outweighed RBI support. Additionally, they fell over foreign fund outflows and fading expectations of RBI rate cuts.
- However, later in the week, few gains were witnessed driven by expectations and execution of RBI bond purchases.
- In the weekly debt sale held on December 19, the RBI auctioned 6.01% GS (Government Security) 2030 and 7.09% GS 2075 for a total notified amount of Rs 30,000 crore.
Indian debt market indicators
Source: CRISIL Fixed Income Database, RBI *Weighted Average Yield ^Data as of 12th December 2025 vs 5th December 2025 vs 7th November respectively
India yield curve shift (%) (W-o-W)*
Source: CRISIL Fixed Income Database; *Weighted Average Yield
Indian equity market updates
- Indian equity closed lower this week, dragged down by persistent foreign fund outflows and uncertainty over US-India trade talks amid mixed global cues. However, a few gains were seen after softer US inflation data and revived hopes of a rate cut by the US Federal Reserve (Fed). The BSE Sensex and Nifty 50 fell 0.40% and 0.31%, respectively.
- Majority major sectors closed lower, with the top losers being BSE Power, BSE Bankex and BSE Auto, which fell 0.99%, 0.78% and 0.51%, respectively.
- The domestic market bought Rs 5,200 crore worth of equities on December 19, 2025, compared with buying of Rs 2,828 crore worth of equities on December 12, 2025.
- Foreign institutional investors bought equities worth Rs 614 crore on December 18, 2025, compared with selling of Rs 1428 crore on December 12, 2025.
Indian equity Indices
Source: BSE, NSE
Source: SEBI, BSE
Global Equity market summary
- US stocks declined during the week due to rising unemployment rate. Further, increasing worries over economic uncertainty over aggressive trade policy and concerns around an AI bubble put pressure on the market.
- However, a few gains were witnessed due to soft inflation report and a less hawkish policy update.
- Britain's FTSE Index closed higher during the week owing to a surge in banking stocks after the Bank of England announced plans to relax capital requirements to boost growth.
- The gains were further bolstered by unexpected slowness in US inflation and a rise in mining stocks. However, few losses were witnessed due to a decline in energy and financial shares.
- Japan's Nikkei closed lower during the week, led by a decline in technology stocks amid lingering valuation concerns.
- However, a few gains were witnessed after Bank of Japan’s decision to raise short-term rates to 0.75%.
- Hong Kong's Hang Seng Index closed lower during the week, weighed down by concerns over China's slowing growth and losses in technology stocks amid concerns over an AI bubble.
- However, a few gains were witnessed as investors were optimistic about monetary easing after softer US inflation data and expectations of policy support from China.
- China's Shanghai Composite Index closed flat this week as gains from technology stocks were offset by worries over dismal earnings, which kept investors cautious ahead of fresh policy signals.
Global equity benchmark indices’ returns
Source: Websites of respective stock exchanges; *Data as on December 18th
Global Yield
- US Treasury prices were up during the week as the recent slew of economic data raised expectations of a rate cut by the Fed.
- Bond prices rose November's Consumer Price Index report showed smaller-than-expected increases in headline and core inflation, signalling easing price pressures.
- Bond prices elevated further as delayed jobs data revealed a net loss in payrolls for October/November and a rising unemployment rate, further supported the Fed's easing stance.
- The yield on the 10-year benchmark Treasury bond closed at 4.12% on December 18 compared with 4.19% from December 12.
Major global bond yields
Source: Financial Websites *As of December 18th
Commodities and Currency
- Crude oil prices fell to $56.15 per barrels on the NYMEX during the week (ended 18, December, 2025) after the US ordered a blockade of sanctioned Venezuelan oil tankers, raising geopolitical uncertainties and easing fears of a global supply glut.
- Gold prices closed lower this week on account of profit-booking after the Bank of Japan’s rate hike and softer US inflation data.
- The rupee closed higher vs the US dollar this week, supported by sustained RBI intervention and softer US inflation data. However, a few losses were seen due to persistent foreign fund outflows and continued uncertainty over an India-US trade deal.
Commodity prices
*Data as on December 18th, 2025 Source: Respective commodity exchanges, ibjarates.com
Other currencies vs the rupee
Source: Financial websites
Global Economic
- US unemployment rate increased to 4.6% in November 2025 compared to 4.4% in August 2025.
- US job growth rose to 64,000 in November 2025 compared to a loss of 1,05,000 in October 2025.
- US annual inflation rate eased to 2.7% in November 2025, compared to 3% reported for September 2025.
- The ECB left borrowing costs unchanged for a fourth consecutive meeting in December 2025, with the main refinancing rate remaining at 2.15% and the deposit facility rate holding at 2.0%.
- Eurozone annual inflation rate came in steady at 2.1% in November 2025, unchanged from October 2025.
- UK annual inflation rate slowed to 3.2% in November 2025 compared to 3.6% in October 2025 while the annual core inflation eased to 3.2% from 3.4%.
- UK industrial production fell by 0.8% year-on-year in October 2025, slowing from a 2.5% decline in the previous month.
- UK manufacturing production fell by 0.8% year-on-year in October 2025, easing from a 2.2% decline in the previous month.
- UK GDP grew 1.1% year-on-year in October 2025, the same as in September and below forecasts of 1.4%.
- The Bank of England cut the Bank Rate by 25 basis points to 3.75%, as easing inflation and growing signs of economic strain prompted policymakers to act.
- Japan’s annual inflation rate edged down to 2.9% in November 2025 from October's 3-month high of 3.0%.
- Japan’s industrial production increased 1.60% in October of 2025 over the same month in the previous year.
Macro indicators
Disclaimer
The information contained in this newsletter (“Newsletter”) is for general informational purposes only. Northern Arc Capital Limited (“Northern Arc”) does not make any warranties about the completeness, reliability, and accuracy of this information. Any action you take upon the information contained in this Newsletter is strictly at your own risk, and Northern Arc will not be liable for any losses and damages in connection with the use of our Newsletter.
The data included in this Newsletter has been obtained from sources that are believed to be reliable and accurate at the time of publication. However, Northern Arc does not guarantee the accuracy or completeness of any information, nor does it assume any responsibility or liability for any errors or omissions therein. Any opinions expressed herein are subject to change without notice and Northern Arc is under no obligation to update or keep current the information contained in this Newsletter.
This Newsletter is not intended to constitute, and should not be construed as, investment advice or a recommendation to purchase, sell, or hold any security or to engage in any investment strategy or transaction. Readers should not rely solely on the information provided in this Newsletter for making investment decisions and should conduct their own due diligence or seek the advice of a qualified professional.
The content of this Newsletter is for informational purposes only and is not a solicitation or an offer to buy or sell any securities or financial instruments. Northern Arc is not responsible for any investment decisions made by the recipients of this Newsletter. Readers should take independent financial advice from a qualified professional in connection with, or independently research and verify, any information that is provided in this Newsletter and wish to rely upon, whether for the purpose of making an investment decision or otherwise.
Northern Arc and its affiliates, directors, employees, and agents expressly disclaim any and all liability for any direct or indirect losses, damages, or expenses of any kind arising out of or relating to the use of this Newsletter, including but not limited to, any losses related to the accuracy, completeness, timeliness, or reliability of such information.
This Newsletter may contain forward-looking statements that are based on current expectations, estimates, forecasts, and projections about the markets in which Northern Arc operates, as well as management’s beliefs and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results.
This report is intended solely for the recipient and is not for further circulation. Any distribution, modification, reproduction, or disclosure of the contents of this Newsletter, in whole or in part, without the prior written consent of Northern Arc, is strictly prohibited.