November saw markets edge to new highs as GDP surprised and inflation cooled. The rupee stayed weak and SEBI’s digital-gold warning stirred the fintech space. We also spotlighted two themes shaping 2025: India’s defence buildout and the forces behind long term returns.

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Markets Last Month 🗓️

1. Markets in November: Highs Without the Hype

An all time high that doesn’t feel like highs! November was a month where Indian markets quietly built on their momentum. The Nifty 50 added to its winning streak and crept to all time highs after 14 months, supported by healthy corporate earnings and steady domestic flows. Large caps did most of the heavy lifting, while mid and small caps were at the back burner. The macro backdrop at home played a far bigger role than global cues. Softer inflation readings, a stronger than expected Q2 GDP print, and robust festival season consumption all helped reinforce confidence. Liquidity conditions also eased as system level surplus was maintained by RBI, improving sentiment across rate sensitive pockets. Overall, November felt like a month of consolidation rather than exuberance. A market waiting for stronger triggers but still anchored by a solid macro backdrop and improving policy visibility.

2. Q2 GDP Surprises on the Upside

India’s Q2 FY26 GDP data for the quarter was the headline moment of the month and rightfully so. At 8.2%, growth came in meaningfully higher than expectations and delivered the strongest quarterly performance in a year and a half. What stood out was the breadth of the recovery: manufacturing, construction and services all fired together. Manufacturing grew over 9%, construction stayed above 7%, and services, especially financial and real estate segments, continued to outperform.

What this number signals is not just cyclical strength, but a maturing expansion phase where investment, consumption and productivity are all contributing at once. Importantly, the upside came despite weak exports and a still challenging global environment. For policymakers, this print widens the comfort zone. Inflation is cooling, growth is accelerating, and the investment cycle is finally moving.

The market is already adjusting to this new reality. Full year FY26 estimates are being revised higher, and the narrative of India as the world’s fastest growing major economy now has even firmer data behind it.

3. Inflation Drops to Almost Zero

October’s inflation reading, just 0.25%, felt almost surreal. It is not often that India sees a number this low, especially in an environment where global commodity prices remain volatile. The sharp correction in food prices was the biggest driver, but this was not merely a vegetable price story. Core inflation stayed well behaved, input costs moderated, and the GST rate cuts on mass consumption items also played a role in the disinflation trend.

For markets, it is a perfect setup: strong growth on one side and soft prices on the other. Investors are already beginning to price in the possibility of a December rate cut, and bond yields have responded accordingly. The one caveat is that such low inflation is unlikely to sustain. Base effects will fade, and food price volatility can return. But even if inflation normalises, India is entering a rare window where macro stability, not macro stress, is the dominant theme.

4. Rupee Weakens Further in November

If the economy was the standout performer of the month, the rupee was the weak link. The INR slipped to around ₹89.7 per dollar, making it one of the poorer performers among major Asian currencies in November. This felt odd because the domestic backdrop looked strong: GDP growth at 8% and inflation near zero. Yet the currency still fell.

Most of the pressure came from outside India. The US dollar stayed strong, global bond yields were high, risk appetite was low, and liquidity across emerging markets was tight. At home, a wider trade deficit and soft FPI flows added to the drag. The RBI did step in at times to reduce volatility, but the overall direction was still downward.

For exporters, a weaker rupee gives a short term advantage. For import heavy sectors, it increases costs. For the broader market, it remains one of the few soft spots in an otherwise solid macro picture.

5. SEBI Flags Risks in Digital Gold

SEBI’s warning on digital gold in November was a reality check for a product that grew fast without any real rules around it. Apps made buying digital gold feel as simple as a mobile recharge, but the convenience hid a big issue. Digital gold has never been a regulated investment.

SEBI called this out clearly. Investors were basically buying a promise that some private vault somewhere was holding gold for them. There were no firm checks on custody, purity, pricing, or what happens if something goes wrong. In short, the risks were on the investor, not on the platform.

For fintech platforms, this is a turning point. Any new age investment offering will face closer scrutiny from here on. For investors, it is a reminder that just because something is easy to buy does not mean it is safe or regulated.

Windmill Wisdom 🦉

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Our quant-based, model and smart beta smallcases were reviewed and updated. Head over to the smallcase app, check out the smallcase of your choice, > Go to Stocks & Weights tab and scroll down to download the Portfolio Report to view the rationale behind the rebalance.

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