Sensex, Nifty lag with 5% dollar-adjusted decline in July as global equity markets rally

The month of July saw India's benchmark indices underperforming, while equity markets across the globe, including the U.S. S&P, NASDAQ, and UK FTSE recorded gains, according to Sebi's latest monthly bulletin.

Most equity markets across the globe rallied and ended in green, with the U.S. S&P 500 and tech focused NASDAQ, fuelled by stronger than expected Q2 earnings, reaching their all-time high levels. Similarly, UK FTSE, France CAC 40 and Germany DAX in Europe recorded gains in July, though these were erased when returns were adjusted to the U.S. dollar terms.

The Indian equity market, in contrast to major global indices, underperformed in July 2025. "On a dollar-adjusted basis, the Sensex and Nifty 50 declined by 5 per cent, while Hong Kong’s Hang Seng advanced by 2.9 per cent," says Sebi's report.

Apart from India, Japan, Brazil, and South Africa also recorded negative gains, with Brazil's benchmark IBOVESPA recording -7.1% returns when adjusted to the U.S. dollar.

Trailing P/E ratios across major global markets moderated compared to their highs seen in 2024. "Indian equities continued to trade at premium, trailing behind only US markets and higher than other developed and emerging markets. Nifty 50’s trailing P/E ratio of 23 at the end of July-25 reflects a strong market optimism," says the Sebi bulletin.

Additionally, the regulator said, the index’s sectoral composition, dominated by financial, IT and consumer stocks that usually trade at higher multiples, has further kept the overall P/E ratio elevated.

At the end of July 2025, India’s 10-year government bond yield was one of the highest amongst emerging economies. While due to a stronger US dollar, all major currencies including Indian rupee depreciated.

On the policy front, Sebi introduced a series of policy measures aimed at strengthening the Indian securities market in July. These include special window for re-lodgement of transfer requests of physical shares, common contract note with single volume weighted average price (VWAP), the launch of monthly electricity futures contract by NSE, and the launch of Samuhik Prativedan Manch for stock brokers.