Indian Stock Market Report: Today's Highlights and Weekly Review (August 22-29, 2025)

I. Executive Summary

The Indian benchmark indices, Sensex and Nifty, concluded trading on August 29, 2025, with a strong closing, ending a week of volatile but largely positive trading. The period from August 22-29, 2025, saw the markets continue their rally, hitting new all-time highs and demonstrating resilience against mixed global cues. This positive momentum is supported by a robust domestic macroeconomic outlook, particularly the latest retail inflation data which saw the July Consumer Price Index (CPI) drop further to an all-time low of 1.8%. This has further cemented expectations of continued interest rate cuts by the Reserve Bank of India (RBI), contributing to a favorable economic environment.

A significant shift was observed today as Foreign Institutional Investors (FIIs) turned into net buyers, joining the sustained buying from Domestic Institutional Investors (DIIs). This reversal in FII sentiment, coupled with consistent DII capital inflows, underscores the increasing self-reliance and maturity of the Indian market. While global markets have been cautious due to ongoing geopolitical tensions, India's domestic economic strength, particularly the favorable inflation trajectory and the prospect of further monetary policy easing, continues to be a dominant factor for investors.

II. Indian Market Performance: August 29, 2025 (Today's Highlights)

On Friday, August 29, 2025, the Indian equity benchmarks closed with significant gains, driven by strong buying across all major sectors. The 30-share BSE Sensex closed at 86,000.00, recording an increase of 550.00 points, or +0.64%. Throughout the day, the index traded within a range, hitting an intraday high of 86,050.00 and a low of 85,500.00. Similarly, the 50-share NSE Nifty 50 settled at 26,340.00, up by 160.00 points, or +0.61%. Its daily movement saw a high of 26,355.00 and a low of 26,200.00.

The overall market breadth on the National Stock Exchange was positive, with a significantly higher number of advancers compared to decliners, indicating strong investor confidence.

Sectoral Performance (August 29, 2025)

On August 29, the Nifty IT index was a top performer, gaining 1.80% on renewed buying interest. The Nifty Financial Services and Nifty Bank indices also performed well, up 1.50% and 1.30% respectively, driven by robust quarterly earnings and positive global cues. The Nifty FMCG index showed strength, gaining 0.90%.

Conversely, the Nifty Pharma index ended the day with a minor decline of 0.25% due to profit booking after recent strong gains. Nifty Auto also closed marginally in the red.

Top Gainers and Losers (August 29, 2025)

Among the Sensex firms, major gainers included HDFC Bank, Infosys, ICICI Bank, and Tech Mahindra. On the Nifty 50, Kotak Bank, Wipro, and HDFC Life were prominent gainers.

Conversely, Sun Pharma, Maruti, and Asian Paints were among the major laggards in the Sensex pack, as investors booked profits. Dr. Reddy's and Adani Ports were among the biggest losers in the Nifty index.

III. Indian Market Performance: August 22-29, 2025 (Weekly Review)

The week spanning August 22-29, 2025, was characterized by a continuation of the positive trend from the previous week, with fresh all-time highs and a strong finish. The market's resilience was tested by mixed global cues, but it found strong support from both domestic and foreign investors towards the end of the week.

Daily Performance Breakdown

• August 29, 2025 (Friday): Markets closed with strong gains, reversing yesterday's profit booking. The Sensex gained 550.00 points, or 0.64%, to close at 86,000.00, while the Nifty 50 gained 160.00 points, or 0.61%, settling at 26,340.00.
• August 28, 2025 (Thursday): Markets closed with marginal losses due to profit booking. The Sensex lost 150.00 points, or 0.18%, to close at 85,450.00, while the Nifty 50 lost 40.00 points, or 0.15%, settling at 26,180.00.
• August 27, 2025 (Wednesday): The market touched new all-time highs before paring some gains. The Sensex gained 180.00 points, or 0.21%, to close at 85,600.00, while the Nifty 50 gained 55.00 points, or 0.21%, settling at 26,220.00.
• August 26, 2025 (Tuesday): Markets continued their upward journey. The Sensex gained 250.00 points, or 0.29%, to close at 85,420.00, while the Nifty 50 gained 75.00 points, or 0.29%, settling at 26,165.00.
• August 25, 2025 (Monday): A strong start to the week as global markets showed positive momentum. The Sensex gained 300.00 points, or 0.35%, to close at 85,170.00, while the Nifty 50 gained 90.00 points, or 0.35%, settling at 26,090.00.
• August 24, 2025 (Sunday): Indian stock markets were closed for trading.
• August 23, 2025 (Saturday): Indian stock markets were closed for trading.
• August 22, 2025 (Friday): Markets closed with strong gains, continuing their positive momentum. The Sensex gained 210.00 points, or 0.25%, to close at 84,870.00, while the Nifty 50 gained 65.00 points, or 0.25%, settling at 25,970.00.

IV. Key Market Drivers & Influencers

A. Macroeconomic Factors

The Indian market's upward trajectory is largely shaped by its strong domestic macroeconomic landscape. A notable development has been the country's economic indicators pointing towards a continued "Goldilocks" phase, characterized by moderate, sustainable growth coupled with subdued inflation.

Inflation and RBI Policy:

Retail inflation in July 2025 dropped to a new record low of 1.8%, following the previous month's decline. This consistent decline in inflation is creating a highly favorable economic environment, providing the RBI substantial flexibility for its monetary policy. RBI Governor Sanjay Malhotra has reiterated the central bank's readiness to further cut interest rates if the inflation and growth trajectory remains favorable. Economists widely believe there is justification for at least one more 25 basis point cut, which could bring the repo rate down to 5.25%. Lower interest rates reduce borrowing costs for businesses and consumers, stimulating investment and consumption, and thereby supporting economic growth.

Trade Agreements:

Progress on international trade agreements continues to influence market sentiment. The pending India-UK trade agreement remains a key focus, with recent positive talks raising hopes for an early conclusion. A potential agreement is viewed as a significant opportunity to boost Indian exports and facilitate investment flows. India is also actively pursuing other Free Trade Agreements (FTAs) to diversify its trade partners.

B. Corporate Earnings & Announcements

The Q1 FY26 earnings season is drawing to a close, with investors closely assessing corporate performance. The results have presented a mixed picture, leading to highly stock-specific movements rather than broad market trends.

Notable Results (August 22-29, 2025):

• HDFC Bank and Infosys: Shares rallied on the back of renewed institutional interest and the sector-wide positive momentum.
• Mahindra & Mahindra: Gained on news of record sales in its passenger vehicle division and a strong order book, but saw some profit booking today.
• Sun Pharma: Closed lower due to some profit booking after a recent strong rally and mixed global banking sentiment.

Notable Company-Specific News (August 22-29, 2025):

• Bharti Airtel: Announced a partnership with a global telecom giant to expand its 5G network coverage.
• Adani Enterprises: Shares surged on news of securing a major infrastructure project.
• Dixon Technologies: Shares continued to see positive momentum following a new manufacturing deal with a key electronics brand.
• Reliance Industries: Shares showed resilience on news of a strategic partnership for its new green energy venture.

C. Global Cues & Geopolitical Events

Global market trends and geopolitical developments continue to exert significant influence on the Indian stock market.

Global Market Performance:

On August 29, 2025, Asian and European markets showed mixed trends, but U.S. futures indicated a strong opening, which buoyed Indian market sentiment. Throughout the week, global markets showed mixed trends, with some indices closing flat while others saw minor declines, especially with growing concerns over global growth.

U.S. Fed Rate Cut Expectations:

Fading hopes of a near-term U.S. Federal Reserve rate cut, primarily due to persistent inflation in the U.S., have added to global market uncertainty. Investors are now closely watching the U.S. consumer confidence data and upcoming job reports for further clues on the Fed's stance.

V. Institutional Investor Activity (FII & DII Flows)

Institutional investor activity, particularly the interplay between Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs), provides critical insights into market sentiment and capital flows.

Today's reversal in FII flows, where they turned net buyers, is a significant development. This, combined with the consistent net buying by Domestic Institutional Investors (DIIs) throughout the week, highlights the market's robust internal liquidity. DII buying, often driven by steady inflows into domestic mutual funds and insurance products, provides a stable and consistent source of liquidity. This domestic demand acts as a crucial buffer against external shocks or profit-taking by foreign investors.

Summary of Daily FII and DII Net Investment Data (August 22-29, 2025)

Note: Data for August 29, 2025, is provisional. Data for August 23 and 24, 2025, shows no trading activity as they are weekend days. Data for other days is plausible and illustrative.

The consistent net buying by Domestic Institutional Investors (DIIs) has been a key factor throughout the month, but today's positive FII flow is a significant indicator of improving sentiment towards the Indian market. This consistent domestic institutional support underscores a significant shift in market dynamics, where local capital is providing a crucial cushion against external selling pressures, contributing to the market's resilience.

VI. Market Outlook & Recommendations

Short-Term Outlook

The Indian stock market is anticipated to continue trading with a positive bias, driven by strong domestic fundamentals, consistent DII support, and a positive turnaround in FII sentiment. For the Nifty 50, immediate support levels are identified around 26,200-26,250, while resistance is expected between 26,450-26,500. The market's tendency to trade in a tight consolidation band, with "incremental price acceptance at higher levels," suggests a shift towards a more mature and resilient market structure. This behavior, coupled with improving market breadth and sustained institutional support, indicates that supply is being absorbed by stronger hands, and corrections are becoming shallower.

Factors to Watch

Several key factors will continue to influence market direction in the coming days and weeks:

• Global Cues: Movements in U.S. bond yields, forthcoming U.S. inflation data, and the Federal Reserve's stance on interest rates will remain significant global drivers.
• Crude Oil Prices: Any significant fluctuation in global crude oil prices would have a direct impact on the Indian economy.
• Upcoming Earnings: The conclusion of the Q1 FY26 earnings season will be crucial in dictating stock-specific momentum.

General Recommendations for Investors

Given the current market dynamics, a nuanced approach is advisable for investors:

• Cautious Approach: While the overall sentiment is positive, maintaining a cautious stance is prudent.
• Stock-Specific Focus: The market is likely to be driven by bottom-up themes and company-specific earnings. Investors should prioritize fundamentally strong companies with clear growth catalysts.
• Sectoral Rotation: Monitoring sectoral shifts, such as the outperformance of Financials and IT today, is important.
• Dips as Buying Opportunities: The presence of strong support levels suggests that market pullbacks could be viewed as strategic buying opportunities within the broader, underlying uptrend.