CEO Speak August 2025

Through the Looking Glass: Navigating Markets Amid Shifting Realities

Peering through the looking glass of today’s financial world, we see an environment as unpredictable as Wonderland itself where Alice had stepped into.

August 2025 has been marked with increased volatility in the markets with the current geopolitical and trade uncertainties. Despite India’s robust economic fundamentals, the Indian markets saw significant capital outflows by FIIs fuelled by global investor anxiety. Interestingly, while FIIs sold heavily in the secondary market, they remained active in IPOs, buying crores worth of equities through the primary route. In an interconnected world, we cannot completely shield ourselves against the effects and fall outs of developing situations across the globe. Yet, the Indian economy continues to be on its growth track, and the markets have also shown resilience over time.

India’s GDP (gross domestic product) growth is still at 7.4 per cent (YoY) in Q425 and even with the tariff changes the outlook and projection does not show a drastic decrease. It is expected to carry on with the momentum gained last year. The government and the Reserve Bank of India are also taking measures and continued efforts to boost private consumption, liquidity in the markets and support to small and medium enterprises. Income tax rate cuts, RBI’s monetary policies, GST reforms are all aligned to the over arching goal of boosting the Indian economy.

Through the GDP lens

Over the last many years, India’s stock markets have broadly mirrored the trajectory of the country’s GDP growth. Periods of strong economic expansion—driven by consumption, infrastructure investment, and digital adoption—have coincided with bull phases in equities, while slowdowns or external shocks have translated into market corrections. The long-term trend shows that as India’s GDP has steadily grown to make it one of the world’s fastest-expanding large economies, equity indices too have compounded wealth, reinforcing the link between economic growth and market performance. Hence, investors should keep their focus on their long-term financial goals, continue with their SIPs and not react to market cycles.

Source: Crisil, Bloomberg, BSE, IMF, The GDP projection for fiscal year 2026 is shown shaded in this graph is for illustration purposes only and is not guaranteed. Data as on 29 August 2025, Past Performance May or May not be sustained in future. Note-The details provided above are as per the information available in public domain at this moment and subject to change.

Through the sectoral performance lens

Over the last one-year, sectoral performance in India has been a story of sharp contrasts. Financial services and banking led the pack with healthy double-digit gains, supported by strong credit growth and resilient balance sheets. Healthcare too delivered steady positive returns, buoyed by global demand and domestic consumption. On the other hand, globally linked sectors such as IT, Oil & Gas, and Autos came under pressure, while Realty and Media saw some of the steepest declines. Interestingly, gold and silver emerged as strong outperformers, highlighting the importance of diversification.

As an investor, asset allocation and investing in sectoral/thematic funds as per one’s risk appetite and financial goals can have a directional impact on your overall portfolio of investments.

What this means for Mutual Fund investors:

• Rising Domestic Resilience
  The market’s resilience is being bolstered by domestic flows—DIIs and SIPs—which provide a stabilizing influence amid FPI sell-offs
• Sector Tilt Matters
  Fund managers and investors appear to support sectors rooted in domestic demand. A growing trend of outperforming sector-specific funds versus broad indices suggests active, theme-aware investing is another option in an investor portfolio for those who want to take the risk
• Diversify Beyond Equities
  Given bullion’s robust performance, precious metals may be considered as effective hedges in portfolios
• SIP Discipline Pays Off
  The consistency of SIP inflows even during a volatile August demonstrates the strength of disciplined investing and rupee-cost averaging—key mechanisms for navigating uncertainty

Much like Alice stepping through the looking glass into a world of shifting shapes and curious characters, investors too must navigate this landscape of surprises and contradictions. Yet, even amidst the uncertainties, a careful gaze through the looking glass reveals resilience, opportunity, and steady threads of growth.

Happy Investing and Stay Invested.

Investors are requested to note that as per SEBI (Mutual Funds) Regulations, 1996 and guidelines issued thereunder, HSBC AMC, its employees and/or empanelled distributors/agents are forbidden from guaranteeing/promising/assuring/predicting any returns or future performances of the schemes of HSBC Mutual Fund. Hence please do not rely upon any such statements/commitments. If you come across any such practices, please register a complaint via email at investor.line@mutualfunds.hsbc.co.in.

Views provided above are based on information in public domain and subject to change. Investors are requested to consult their financial advisor for any investment decisions.

Source: HSBC MF, CRISIL. Data as on August 2025 end or as latest available

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