India Fund Q2 2025 Commentary: Performance Review

The India Fund rose 7.32% in Q2 2025, but lagged the benchmark's 9.73% gain. Negative stock selection in energy, healthcare, and real estate sectors were offset by positive performance in communication services, consumer staples, and financials. The fund's performance was driven by its diversified portfolio and strategic positioning.

The India Fund reported a 7.32% increase in the second quarter of 2025, lagging behind the benchmark's 9.73% gain. The fund's performance was influenced by both positive and negative stock selection across various sectors. The energy, healthcare, and real estate sectors contributed negatively, while communication services, consumer staples, and financials drove positive returns.

Key contributors to the fund's performance included KFin Technologies, which benefited from the broader Indian stock market's growth, and Bharti Airtel, whose share price gained following government support for rival telecom player Vodafone Idea. SBI Life Insurance also outperformed within the insurer segment, driven by healthy new business growth.

The fund's infrastructure capex-related names, particularly KEI Industries and Siemens Ltd, saw re-rating after correcting in the previous quarter. Meanwhile, automotive systems supplier Uno Minda and software and services sector companies like Coforge and Tata Consultancy Services exhibited mixed performance. NTPC and Reliance Industries were notable detractors, with the latter's share price rising despite concerns over corporate governance and capital allocation.

Market volatility was driven by external factors such as US President Donald Trump's announcement of reciprocal tariffs and geopolitical tensions between India and Pakistan. Internally, the Reserve Bank of India's rate cuts and liquidity injections boosted market sentiment. Inflation rates also hit a six-year low, providing further support to the market.

Looking ahead, the fund's outlook remains cautiously optimistic, acknowledging the potential for a US recession and global supply chain disruptions. The fund's quality focus and defensive holdings are expected to provide downside protection. The long-term structural growth story in India, bolstered by government initiatives such as the 'Make in India' program and public-private partnerships, remains intact.

The India Fund's performance in Q2 2025 underscores the importance of strategic positioning and diversification in navigating market volatility and external uncertainties. The India Fund Q2 2025 Commentary^[1]