India Bucks Tepid Trend Across Emerging Asia as US Data Awaits

Mumbai, June 6, 2025 — Indian equity markets stood out from a largely subdued Asian landscape on Thursday, closing higher in a session marked by caution across emerging markets ahead of crucial U.S. macroeconomic data. As global investors kept a wary eye on upcoming U.S. non-farm payrolls and inflation figures, India demonstrated resilience, supported by robust domestic fundamentals and investor confidence.

Nifty and Sensex Advance Amid Global Unease

The benchmark Nifty 50 rose 0.42% to close at 24,735.15, while the BSE Sensex gained 310.45 points, or 0.41%, settling at 81,206.87. While markets across Asia — including those in China, South Korea, and Indonesia — hovered near the flatline or closed lower, India diverged, buoyed by strong performances in banking, auto, and FMCG sectors.

Broader indices also reflected optimism. The Nifty Midcap 100 and Nifty Smallcap 100 outperformed, adding 0.7% and 0.8% respectively, suggesting sustained retail and institutional interest in India's growth stories beyond the blue-chip space.

Regional Peers Remain Subdued

Elsewhere in Asia, markets treaded water. The Shanghai Composite fell 0.3%, the Hang Seng dipped 0.6%, and South Korea’s KOSPI slid 0.4%, largely in response to concerns over slower global growth and upcoming U.S. economic prints that could influence the Federal Reserve's rate trajectory.

“Most Asian markets are on pause, reflecting investor hesitation ahead of the U.S. jobs report and inflation data. There’s also apprehension over whether the Fed could surprise with a hawkish tone if inflation proves sticky,” said Kenneth Wong, Chief Strategist at EastBridge Capital.

India Benefits from Economic Optimism, Policy Continuity

India’s resilience is underpinned by optimistic GDP growth projections, steady earnings delivery, and continuity in macroeconomic policies. The recently announced Q4 FY25 GDP figure of 7.3% has reinforced investor faith in India’s economic momentum.

“India is benefiting from a virtuous cycle of economic stability, strong domestic demand, and controlled inflation. With the general elections behind us and no disruptive policy surprises, foreign investors are willing to reallocate funds into Indian assets,” said Anjali Mehra, Head of Research at Axis Global Investments.

Additionally, data from the National Securities Depository Limited (NSDL) shows that Foreign Portfolio Investors (FPIs) have turned net buyers in June, infusing over ₹7,500 crore so far, contrasting the selling trend seen in other emerging markets.

Rupee Holds Steady, Bond Yields Calm

The Indian rupee traded largely flat at 83.45 per dollar, reflecting stability even as the dollar index edged higher ahead of U.S. data. Meanwhile, India’s 10-year benchmark bond yield stood at 7.02%, unchanged from the previous session, indicating calm in the fixed-income space.

Market participants expect the Reserve Bank of India (RBI) to maintain its accommodative stance, especially with inflation moderating within the 4-4.5% range, and no immediate threats from crude oil prices or currency volatility.

Sectoral Highlights: Auto and FMCG in the Lead

On the sectoral front, auto stocks extended gains, with Maruti Suzuki and Mahindra & Mahindra posting strong upmoves of 2.1% and 1.7% respectively, amid expectations of robust monthly sales and festive demand revival.

FMCG giants like HUL and ITC also supported the indices, reflecting consumer resilience and improved rural demand signals. Financials remained steady with HDFC Bank and ICICI Bank contributing to the Sensex gains.

In contrast, IT stocks traded with mild pressure as uncertainty around U.S. economic data and tech spending outlook kept the segment subdued.

Investor Outlook: Constructive but Cautious

With eyes on the U.S. jobs data due Friday, traders remain cautious about any surprises that could sway the Fed’s decision-making. A hotter-than-expected inflation print could renew rate hike concerns, which might weigh on global risk sentiment.

However, India’s relatively insulated growth story is drawing attention.

“India is offering a compelling case for long-term investors. Even if the Fed stays hawkish for a bit longer, the domestic economy is robust enough to handle short-term external pressures,” said Vikram Bhatia, Global Emerging Markets Portfolio Manager at CapitalSphere.

Looking Ahead: U.S. Data to Steer Short-Term Sentiment

Investors are expected to remain watchful ahead of the U.S. Labor Department’s employment report and the Consumer Price Index (CPI) reading next week. Markets globally could see heightened volatility if data points suggest sustained inflation or labor market tightness, potentially leading to a delay in rate cuts by the Fed.

For India, the strong base of domestic liquidity, earnings momentum, and a steady policy backdrop are expected to support further upside, even in the face of global crosswinds.

India’s outperformance against a cautious regional backdrop showcases the market's growing maturity and resilience. As investors brace for directional cues from global data, India’s underlying economic strength may continue to provide a buffer and an opportunity for alpha generation in the emerging market basket.