Why Are Commodities Rising Even as India's Core Growth Slows?
Here’s your full roundup of the latest business stories from Economic Times, Business Standard, Financial Express, and Mint for 22 October 2025. The key themes this week: rising commodity prices, RBI’s big shift for banks, slowing industrial momentum, and cautious global capital flows. We break it all down in simple language for clarity and action.
Commodities Surge as Dollar Weakens
2025 has turned into a golden year for commodities. As the US dollar slides nearly 10% year-to-date, metals priced in dollars—like gold, silver, and copper—have become cheaper for other countries, driving global demand upward. Platinum has also made a surprising comeback after years of underperformance.
| Metal | YTD Price Change | Drivers |
|---|---|---|
| Gold | +22% | Weak dollar, inflation hedge |
| Silver | +28% | Industrial demand, EV growth |
| Platinum | +57% | Supply crunch, jewellery demand |
In simple terms, when the dollar weakens, global investors move money into tangible assets like metals to preserve value. This inflates prices of both precious and industrial metals. Investors can view this as a hedge against inflation and global uncertainty.
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RBI's Nod Puts Banks at the Centre of Corporate Deals
The Reserve Bank of India has given banks permission to fund mergers and acquisitions. This move means banks can now play an active role in financing large corporate takeovers — something that was largely off-limits before.
What It Means: Banks will become key players in India's corporate finance ecosystem. This could boost credit demand by ₹5 lakh crore over time, but it also calls for strong risk management to avoid future bad loans.
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India’s Core Growth Slows to 3% in September
India’s eight core sectors — from coal to cement — slowed to 3% in September, compared to 6.5% in August. Key drags were crude oil (-1.3%) and refinery products (-3.7%), though steel and cement output rose sharply.
- Steel output grew 14.1%, signaling infrastructure demand remains healthy.
- Cement rose 5.3%, tied to housing and rural projects.
- Electricity generation rose 2.1%, showing moderate power demand.
This slowdown matters because these eight sectors account for nearly 40% of the IIP (Index of Industrial Production). If this weakness continues, corporate earnings in infrastructure, power, and materials could face headwinds.
Net FDI Turns Negative Amid Outflows and FPI Selling
For August 2025, India recorded a rare negative net FDI as outflows exceeded inflows. While gross inflows stood at $6 billion, repatriations touched nearly $4.9 billion, signalling rising caution among foreign investors.
For readers unfamiliar, FDI (Foreign Direct Investment) refers to long-term capital investments by foreign entities into domestic businesses. Negative FDI means more money left the country than entered — not a good signal for external confidence.
| Month | Gross Inflows (USD bn) | Net FDI (USD bn) |
|---|---|---|
| July 2025 | 11.1 | +5.9 |
| August 2025 | 6.0 | -0.4 |
RBI Report Highlights Domestic Resilience
Despite global headwinds, RBI’s October bulletin paints a positive picture: India’s growth is being driven by urban consumption, improved rural demand, and robust banking stability. CPI inflation has dropped to its lowest level in eight years, giving the central bank scope to consider a rate cut by year-end.
Goldman Sachs also expects that GST reforms and falling inflation will spur credit growth, estimating FY26 loan growth between 18%–20%. That would mark a strong revival for the credit cycle.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, notes that while India’s domestic story remains resilient, global flows and core-sector data show mixed signals.
- Invest selectively in metals and commodity-linked sectors, but avoid over-leveraged companies.
- Banks may see a new lending boom from M&A reforms — focus on large, well-capitalised names.
- Core-sector slowdown suggests caution in industrial and infrastructure plays.
- Expect possible RBI rate cuts that could lift banking, housing, and auto stocks.
- Track FDI trends — sustained outflows could weaken the rupee and foreign inflow confidence.
Discover deeper analytical insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Today's Headlines
- Why is the dollar’s fall driving up metal prices?
- How will RBI’s M&A rule change bank profitability?
- What does a negative FDI figure mean for India?
- Will RBI’s rate cut trigger a credit cycle boom?
- Which sectors to watch after core-sector slowdown?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
