23-07-2025
- Business
- Business Standard
From Tourism to Tech: Sector surge lifts markets in June, Small--caps lead
Indian equity markets weathered mid-month global volatility in June 2025, as domestic macroeconomic stability and improving investor sentiment supported a broad-based rally across segments. According to PL Asset Management's latest report, PMS Strategy Updates and Insights, the Nifty 50 rose 3.1% in June, driven by strong participation, healthy corporate earnings, and a sharp rebound in global equities after geopolitical concerns eased.
Small and mid-cap indices led the charge, with the Nifty Small-cap 250 jumping 5.73% and the Nifty Mid-cap index climbing 4.1% during the month. These gains reflect a renewed risk appetite and broader market participation, even as global headwinds such as crude price spikes and foreign capital outflows kept volatility elevated.
Sector and Style Winners
Thematic sectors like Digital (+5.42%), Infrastructure (+4.89%), and Tourism (+4.38%) were among the standout performers in June, while on a 12-month basis, Defense (+21.78%), Healthcare (+15.01%), and Financials (+14.3%) outpaced the broader market. Banking and IT sectors also saw renewed momentum, aided by strong credit demand and tailwinds from digital transformation.
Cyclicals led the rally in June, while PL noted that high-risk style exposures outperformed in the short term, even though they still lagged on a rolling 12-month basis.
Valuations and Market Breadth
While valuations—especially in the mid- and small-cap segments—have edged toward the expensive zone, PL Asset Management believes the shift is warranted, backed by strong earnings trajectories and a supportive macroeconomic backdrop.
'Market sentiment has been recovering steadily since March 2025,' said Siddharth Vora, Head of Quant Investment Strategies & Fund Manager at PL Asset Management. 'The Nifty500 Equal Weight vs. Nifty500 return spread is climbing off cyclical lows—an early sign of improving breadth.'
He added that while no single style is dominating factor returns, a diversified, multi-factor approach remains best suited for navigating this normalization phase.
Caution Ahead Despite Optimism
The report concluded on a cautiously optimistic note. 'Disinflation trends, robust tax collections, and strong capital expenditure are providing a firm macroeconomic base,' said Vora. 'However, volatile FII flows, tariff-related developments, and monsoon uncertainties remain important variables to monitor in H2 CY25.'
As the second half of 2025 unfolds, PL Asset Management recommends a balanced and dynamic approach to portfolio allocation, supported by earnings visibility and prudent risk management.
