The Capex Comeback, Global Trade Friction & India’s Quiet Resilience

Dear Investor,

History doesn’t repeat—but it often rhymes.

We believe India is entering a rare and promising phase where domestic investment, monetary easing, and trade assertiveness are converging to define a new economic narrative. This moment, we think, deserves your attention.

Capex: The Engine is Firing Again

After a decade of inertia, capex is making a serious comeback.

Last year, political compulsions—general and state elections—slowed government capital expenditure. The budgeted target was revised down from ₹11.2 trillion to ₹10.2 trillion. Yet, against expectations, the government spent the entire revised allocation, with a staggering ₹2.4 trillion disbursed just in March.

FY25 is off to an even faster start. ₹1.68 trillion was spent in April and May alone. Including June, capex has likely crossed ₹2.1 trillion already. If this pace holds, the government may well reclaim the original ₹11.2 trillion mark—possibly exceed it.

And it’s not just the government pulling its weight. For the first time in recent memory, listed companies have outspent the central government, breaching ₹11 trillion in corporate capex for FY25—a 20% YoY surge. This shift is not cyclical—it is structural.

From just 86 companies spending more than ₹8 billion in capex in 2017, the number has now surged to 157. We haven’t seen this kind of broad-based industrial reinvestment since the early 2000s, just before India’s last major capex cycle took off.

Markets: Mid & Small Caps Shine, Volatility Softens

While the Nifty rose 3.1% in June, the real story was elsewhere. Mid and small caps outperformed again, with the Nifty Midcap 150 up 4.1% and Nifty Smallcap 250 up 5.7%. Sectoral resilience was most visible in telecom, healthcare, and realty.

More importantly, volatility indicators like India VIX fell to 12.8—highlighting growing market comfort, even amid geopolitical tremors and commodity swings. The RBI’s 50 bps rate cut to 5.50% signals the central bank’s pro-growth stance, supported by softening inflation.

Trade Talks: Holding the Line

On the geopolitical front, New Delhi has drawn clear red lines.

As the U.S. under President Trump renews trade pressure, India has conveyed its unwillingness to breach core domestic interests—including rejecting entry of genetically modified crops and refusing to fully open its dairy and automobile sectors to American imports.

With the reciprocal tariff pause set to expire soon, some volatility is expected. But India’s resilience lies in its policy maturity, focused on long-term self-reliance rather than short-term appeasement.

We are in an era where economic normalisation doesn’t mean doing less—it means doing it better.
Volatility isn’t a threat—it’s a tool. A tool that, when handled with discipline and data, can unlock outsized returns.

At PMS AIF WORLD, we see this cycle not as a bet on momentum, but as a moment of alignment: government intent, corporate confidence, and monetary support all lining up.

We are actively curating high-conviction, bottom-up strategies across PMS & AIFs— especially those linked to financials, capital goods, infrastructure, and Discretionary consumption—where we see enduring value.

Thank you for trusting us as your investment partner. We remain committed not just to returns, but to perspective

Our endeavors are to determine the Quality, Risk, and Consistency attributes (QRC). We present all data and analytics with an endeavor and the aim of informed investment decisions. If you are looking to invest and are not able to decide between PMS and Mutual Funds, or between PMS and Alternative investment funds, Book A Video Call with our experts.