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On December 12, 2025, India’s financial markets displayed cautious optimism amid monetary easing, persistent foreign outflows, and a weakening rupee. The Reserve Bank of India’s recent policy actions remained in focus, while domestic investors cushioned equity markets against global headwinds. Here is a concise roundup of the day’s major developments:
Monetary Policy and Economic Outlook
The RBI’s decision earlier in the week to cut the repo rate by 25 basis points to 5.25 percent (the fourth straight reduction in 2025, taking cumulative easing to 125 basis points) continued to support sentiment. The move was aimed at reviving credit growth in a bank-led economy while keeping inflation under control. Finance Minister Nirmala Sitharaman highlighted India’s strong fundamentals and reforms such as tax cuts and labour law simplification, reiterating confidence in sustaining around 7 percent GDP growth despite global risks. Bank credit growth stood at 11.1 percent year-on-year, though deposit growth trailed at 9.74 percent, underscoring liquidity tightness. The banking system remained robust with a capital adequacy ratio of 17.24 percent, gross NPA ratio at a multi-decade low of 2.05 percent, and net interest margins at 3.26 percent. RBI Governor Sanjay Malhotra noted that the sector is entering 2025 with strong earnings, low impaired assets, and ample capital buffers.
Currency and Capital Flows
The Indian rupee touched a new all-time low of 90.49 against the US dollar in intraday trade on December 12, having weakened 5.74 percent so far in the financial year. Persistent FPI outflows of 17 billion dollars in 2025 (highest in two decades) and importer hedging demand kept the currency under pressure. The RBI has adopted a calibrated approach, allowing gradual depreciation to conserve forex reserves rather than defending aggressively. Merchandise exports rose marginally by 0.5 percent to 253.8 billion dollars in April-October, helped by diversification away from a sharp 12 percent drop in shipments to the United States.
Equity Markets and Corporate Highlights
The Nifty 50 hovered around 25,900, ending a three-day losing streak on buying in auto, IT, and select banking stocks after the US Federal Reserve’s rate cut eased Treasury yields. Over the 2020-2025 period, top wealth creators delivered Rs 46 lakh crore for shareholders, led by Bharti Airtel (Rs 7.9 lakh crore), ICICI Bank, and State Bank of India. Goldman Sachs maintained its bullish long-term view, forecasting that emerging markets led India will outperform global equities over the next decade on strong earnings growth.
Vedanta Ltd won the Genjana Nickel, Chromium, and PGE block in the latest critical mineral auction round. Passenger vehicle production jumped to 29.43 lakh units in November (SIAM data), and Savills India projected 180 million sq ft of additional office demand from Global Capability Centres by 2030. ICICI Prudential AMC raised Rs 3,022 crore from anchor investors ahead of its Rs 10,600 crore IPO that opened on December 12.
Sector Updates
IndiGo faced regulatory heat after cancelling over 4,500 flights in early December; the DGCA summoned CEO Pieter Elbers and the airline appointed an international expert for an independent review.
Commerce Minister Piyush Goyal’s recent EU talks advanced trade and security cooperation, while India committed to record LPG imports from the US Gulf Coast to ease tariff concerns under the incoming Trump administration.
Meesho shares listed at a 45 percent premium on December 10 after raising Rs 5,421 crore. Prada launched Rs 85,000 “Make in India” luxury sandals crafted by artisans in Maharashtra and Karnataka.
Fiscal and Regulatory Developments
The FY26 fiscal deficit may see a Rs 1.5 lakh crore shortfall due to GST rate cuts and softer corporate profits, though higher non-tax revenue and expenditure savings are expected to bridge the gap. The NFRA highlighted serious audit lapses by leading firms on fraud indicators and related-party transactions. Indian banks, for the first time, are actively warming up to merger-and-acquisition financing, viewing industry consolidation as a route to building larger and more efficient corporates.
Overall, December 12 reflected resilient domestic fundamentals and policy support offsetting external pressures from rupee weakness and FPI selling. Attention now turns to evolving US-India trade dynamics and the upcoming Q3 earnings season.
