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Liquidity as the New Driver of Market Dynamics

Gold is often praised as a protection against inflation, but it’s important to remember that correlation is not causation. Throughout my career, I have observed that gold offers reasonable protection against inflation. It is not a perfect hedge, but it is better than most alternatives for those who wish to protect themselves from inflation risk.

For years, Indian car buyers have prioritised mileage, with hatchbacks and sedans symbolising urban aspirations. Yet, even then, Multi-Purpose Vehicles (MPVs) held their ground – valued for their space, power and durability.

The Indian Rupee (INR) has been on a weaker trajectory in 2025, depreciating by 3.7% against the US Dollar as of September 30, 2025. This comes even as the US Dollar Index has declined by around 10% against other major currencies. Consequently, the INR’s fall against key global currencies has been even more pronounced.

Policy Action

• The Monetary Policy Committee (MPC) voted unanimously to keep the policy repo rate unchanged at 5.5%.

“Data is like garbage. You’d better know what you are going to do with it before you collect it.”

(Source: Unknown)

It was hot in the last week of June: 32°C in Zurich, 35°C in Milan and a scorching 40°C in Athens. I was in the thick of it, travelling across Europe for a sales roadshow. Ironically, Mumbai’s Monsoon offered far more pleasant weather. The European summer heat mirrored the heat in global conversations around policies, investments and uncertainties.

The announcement of the reciprocal tariffs by the US administration has roiled markets worldwide. Equities have sold off due to concerns about the outlook for economic growth. We know from experience that lingering uncertainty can cause businesses and consumers to put their decisions regarding investments and consumption on hold.

After a spell of strong returns for over three to four years, the equity market has been in correction mode in the last five months.