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Market Watch

Market Watch

Equity Market Overview April- 2025





Domestic Equity Market Update

  • Indian equities ended the month on a positive note. Large cap-oriented BSE Sensex ended higher by 3.65% (MoM) and Nifty 50 ended higher by 3.46% (MoM). While the BSE Midcap index ended higher by 3.26%(MoM), BSE Small cap index ended higher by 1.63% (MoM). 
  • In terms of BSE sectoral indices, most of the sectors ended on a positive note. Consumer Durable, Oil & Gas, Bankex and FMCG were the gainers during the month.
  • During the month, FPIs were net buyers in equities to the tune of Rs 106 bn. (Data as on 29th April). 
  • Domestic equity markets ended the month on a positive note driven by strong earnings, banking sector reforms, easing US-China trade tensions and consistent foreign fund inflows, the US President's announcement of tariff exemptions for smartphones and computers, along with a suggestion of a potential halt on auto tariffs. Investors also remained optimistic about potential interest rate cuts by both the RBI and the US Fed. However, some losses were seen due to profit booking and heightening geopolitical tensions between India and Pakistan.


Global Market Updates

  • US equites ended the month on a negative note as the tariff announcement stoked recession concerns and worries over weak economic growth and rising inflation. The US Federal Reserve Chief too highlighted the uncertainty regarding the trade tariffs to be adopted by the new US Administration which kept markets under pressure.
  • European equity markets ended the month on a mixed note buoyed by easing US-China trade war and upbeat quarterly earnings supported further gains. Concerns over global trade tensions eased to some extent after the US President indicated temporary exemption of tariffs on auto and auto parts imports in order to give time to car manufacturers to adjust their supply chains. The European Central bank cut interest rates by 25 bps to 2.25% however, selling pressure was seen in European markets after the US tariff announcement on key trading partners escalated global trade conflicts.
  • Brent crude price declined from USD 74.77 per barrel to USD 63.12 per barrel on easing supply worries following reports of progress in nuclear deal talks between the US and Iran and as OPEC+ considered faster output hikes in June.

    Most of the Domestic Macro data points showed a strong picture
  • According to economists in a Reuters poll, the Indian economy will grow a bit slower than previously thought in FY26, US tariffs have negatively impacted business sentiment, raising concerns about already weak private investment Gross domestic product (GDP) growth in India is expected to average 6.3% YoY in FY26.
  • India Ratings & Research, a Fitch Group company, said that it expects the Indian economy to grow at 6.6% YoY in FY26, but warned that rating actions could moderate during the fiscal year. Rating actions encompass all changes made by a credit rating agency, including initial assignments, revisions, outlook changes, suspensions, and withdrawals.
  • As per Moody’s Ratings, Indian economy could grow in the band of 5.5% to 6.5% YoY during the CY25, as the ratings agency factored in the “unpredictable” US tariffs which it said will hit business planning, stall investment and “raise the risk of a global economic recession”.
  • According to the Finance Secretary, Mr. Ajay Seth, the direct hit from tariffs introduced by the Trump Administration on India could shave off between 0.2-0.5% from India’s GDP growth.
  • EY Chief Policy Advisor D K Srivastava said that the maximum adverse impact of reciprocal tariff announced by the Trump administration on India's GDP growth will not be higher than 50 bps. As per the earlier projection, the GDP growth estimate for FY26 was 6.5% YoY, which may go down to 6% YoY without retaliation.
  • The US has announced the suspension of additional tariffs on India for 90 days until July 9, 2025. On April 2, 2025, US President Donald Trump slapped universal duties on about 60 countries exporting goods to America and additional steep levies on countries like India, potentially impacting sales of products in the world's biggest economy.
  • According to the RBI, India’s outward foreign direct investment (FDI) commitments rose about 20% YoY to USD 5.81 bn in March 2025, up from USD 4.84 bn the same month last year. Sequentially, they rose marginally from USD 5.57 bn in February 2025.
  • As per data released by the commerce department, India’s trade deficit with China neared USD 100 bn in FY25, amid escalating concerns of dumping. Chinese imports rose by 11.5% YoY to USD 113.45 bn, while outbound shipments to the neighbouring country saw 14.5% YoY contraction to USD 14.2 bn. As a result, the trade deficit with China widened to USD 99.2 bn in FY25 from USD 85 bn a year ago.
  • According to data from the Petroleum Planning and Analysis Cell (PPAC), the average price of the Indian basket of crude oil has fallen to a 47-month low of USD 68.34 per barrel so far in April 2025.
  • According to official data released, the output of eight key infrastructure sectors slowed down to 3.8% YoY in March 2025, as against 6.3% YoY growth registered in March 2024.
  • Government data showed that Gross GST collection grew 9.9% YoY in March 2025 to over Rs 1.96 trillion, the second-highest mop-up ever. GST revenue from domestic transactions rose 8.8% YoY to ₹1.49 trillion, while revenue from imported goods was higher 13.56% YoY to Rs 46,9.19 bn.
  • As per data from the Ministry of Statistics and Programme Implementation, Industrial Production rose 2.9% YoY in February 2025, much slower than the 5.2% YoY growth in January 2025.
  • Railways and Information and Broadcasting Minister Ashwini Vaishnaw said that the Union Cabinet Committee on Economic Affairs (CCEA) has approved four railway projects across Maharashtra, Odisha, and Chhattisgarh worth Rs186.58 bn.
  • S&P Global showed that the HSBC final services Purchasing Managers' Index dropped to 58.5 in March 2025 from 59.0 in the previous month. India's service sector activity continued to expand strongly in March amid strong demand conditions.
  • As per S&P Global, the HSBC final manufacturing Purchasing Managers' Index climbed to 58.1 in March 2025 from 56.3 in February 2025. The flash reading was 58.6.
  • According to S&P Global, the HSBC flash India Composite Purchasing Managers' Index (PMI) climbed to 60.0 in April 2025 from 59.5 in March 2025, the strongest pace of combined manufacturing and services growth since August 2024. The Manufacturing PMI rose to 58.4 in April 2025 from 58.1 in March 2025 and the Services PMI rose to a four-month high of 59.1 in April 2025 from 58.5 in March 2025.
  • As per CRISIL, the textile industry is expected to recover in FY26 after two years of contraction, driven by stable cotton prices, improving exports of readymade garments (RMG) and steady domestic demand.
  • As per FADA, automobile retail sales grew 6.5% YoY in FY25, driven primarily by a 5% YoY rise in passenger vehicle (PV) sales, an 8% YoY increase in two-wheeler numbers, and a 5% YoY uptick in commercial vehicle (CV) sales.
  • India Ratings penciled a 13% YoY growth in gross written premium of the general insurance segment in FY26 compared to 8.5% YoY in FY25.
  • As per CRISIL, after a lull spanning seven years, India’s commercial vehicle (CV) industry is set to reclaim its pre-pandemic peak, with domestic sales expected to touch the 1 mn mark in FY26. Driving this resurgence will be light commercial vehicles (LCVs), which are projected to account for nearly 62% of total volumes. This resurgence marks a recovery to levels last seen in the pre-pandemic peak of FY19.
  • According to SIAM, automobile exports from India rose by 19% YoY to over 53 lakh units in FY25 driven by robust demand for passenger vehicles, two wheelers and commercial vehicles in the overseas markets.
  • According to Anarock data, lack of supply in the affordable housing segment has helped in reducing of unsold stock to 113,000 units by Q4 FY25, 19% YoY down.
  • According to Knight Frank, housing sales in Q4 FY25 rose 2% YoY to 88,274 units across eight major cities as consumer demand for residential properties continues to be strong.
  • According to a report by Anarock, Private Equity (PE) investments in the Indian real estate sector continued to soften in FY25 amid shifting investor preferences against the backdrop of global economic headwinds.
  • As per Colliers India, Institutional investments in Indian real estate witnessed a robust start to 2025, with total inflows reaching USD 1.3 bn in Q1 CY25, representing a 31% YoY increase. The growth was largely propelled by domestic investors, who contributed 60% of the total inflows, marking a 75% annual growth.

    ​​​​​​​Outlook & Investment Strategy
  • Going forward, the Indian equity market is likely to be driven by movement in the US Dollar index, improvement in consumption demand, FPI/DII flows, further negotiation on the 26% tariff imposed on India by the US, and support by the RBI. With improvement in liquidity and incremental money in the hands of the tax payers from the union budget, consumption and rate sensitive sectors could see traction. Anticipation of further rates cut on back of moderating inflation can further improve market sentiments. Market participants believe any escalation in the India – Pakistan tensions could further create volatility in the markets.
  • The US president has slapped as high as 245% tariffs on certain Chinese goods, while hitting pause on higher duties for most other countries for the next 90 days to allow negotiations which could further decide the trajectory of global trade. Retaliatory tariffs could further create volatility in global trade and further negotiations between US and China on the tariff front would remain a key monitorable.

    The recent challenges and issues with the macro economy and corporate earnings are expected to trough out in the next couple of quarters. With the rate of change in the GDP growth showing signs of improvement, decline in inflation and budgetary support to the middle class is likely to enhance the disposable income in the FY26. With RBI going all out to support growth through a mix of policy rate cuts and liquidity improvement measures, the wheels of the economy are likely to move faster in the medium term. With the currency volatility also expected to get controlled due to decline in the dollar index, FPIs too could look at Indian markets more favourably, especially after the recent valuation correction.

    Market volatility in the near to medium term could be driven by the risk of Donald Trump’s trade policies hurting the economy and weaker than expected Q4 FY25 results (possibly in Small and Midcap segments). Within the Marketcap segments, we continue to prefer Largecaps as they are generally well researched and have lesser scope for negative earnings surprise, while Mid and Small caps may see volatility in earnings selectively (at a stock or sector level). Hence exposure to pure Mid and Small cap funds should be taken through SIPs and Longer STPs. In terms of deployment strategy, we continue to maintain our investment deployment strategy of 50% Lumpsum and 50% staggered over the next 5-6 months. From an Equity Mutual Fund perspective, investors could look at investing in Diversified funds, Hybrid equity funds, Business cycle funds and using SIPs as an instrument to invest in Smallcap/Midcap funds; in line with their risk profile and product suitability from a 2-3 years’ time horizon.




Debt Market Overview April 2025





Domestic banking system liquidity was in surplus throughout the month. Banking system liquidity as measured by the Reserve Bank of India’s (RBI) net Liquidity Adjustment Facility (LAF) stood at a daily average surplus of ~Rs 1.40 trillion in April 2025 as against a daily average deficit of ~Rs 1.24 trillion in the previous month. The call money market traded in the range of ~5.40-6.05% during the month.


Domestic G-sec yields closed sharply lower in April 2025, and the 10-year benchmark, 6.79% G-Sec 2034 bond, ended at 6.36%, compared to the previous month’s close of 6.58%. Indian G-sec yields fell after the RBI announced it would buy bonds worth Rs 800 bn in four tranches during the month. Also, sweeping tariffs by the US boosted expectations of monetary easing amid concerns about growth. Gains were extended after the RBI cut the key policy rates and changed its monetary policy stance to ‘accommodative’ from ‘neutral’, raising hopes for further rate cuts. This was supported by favorable CPI Inflation data for the month of March 2025 which decelerated faster than expected on the back of softening of food prices. However, the gains in bond prices were capped to some extent due to profit booking across asset classes amid rising global trade war concerns and escalating geopolitical tensions following the attack in Kashmir.


Global trade uncertainties escalated as the Trump administration announced reciprocal tariffs on 2nd April 2025. Later it was announced that there will be a 90-day pause on the same till 9th July 2025, with the exception of China. The US economy contracted for the first time in 3 years as the GDP decreased by 0.3% QoQ on an annualised basis in Q1 CY25. Economists had predicted a 0.3% QoQ increase. Inflation in the US and Europe declined further but continued to remain above their central banks’ target of 2%. Consumer Price Inflation in the US decelerated to 2.4% YoY in March 2025 from 2.8% YoY in February 2025. Core inflation also came in lower at 2.8% YoY in March 2025 against 3.1% in February 2025, its lowest since March 2021. Minutes of the Federal Open Market Committee noted elevated uncertainty regarding the scope, timing, and potential economic effects of possible changes to trade, immigration, fiscal, and regulatory policies. As per data from Eurostat, the Eurozone inflation decelerated further, as the harmonized index of consumer prices rose 2.2% YoY in March 2025 as against 2.3% YoY increase in February 2025. The ECB Governing Council cut the deposit rate by 25 bps to 2.25%. The main refinancing rate was also lowered to 2.40% and the lending rate to 2.65%, respectively. ECB also highlighted that the Economic outlook is clouded by exceptional uncertainty. Hence, it will follow a data-dependent and meeting-by-meeting approach to determine the appropriate monetary policy stance. People's Bank of China kept its one-year loan prime rate unchanged for the sixth straight month at 3.10%. Likewise, the five-year LPR, the benchmark for mortgage rates, was retained at 3.60%.


Retail inflation in India eased further as the Consumer Price Inflation (CPI) Index came in at 3.34% YoY in March 2025 from 3.61% YoY in February 2025. India’s Wholesale Price Index (WPI) inflation decelerated to 2.05% YoY in March 2025, from 2.38% YoY in February 2025, lowest since November 2024. India's direct tax collections, in gross terms, have witnessed a robust growth of 15.59% YoY, reaching Rs 27.02 trillion in FY25, data released by the Central Board of Direct Taxes (CBDT) showed. In FY24, it was Rs 23.38 trillion. Corporate tax collections rose to Rs 12.72 trillion, up from Rs 11.31 trillion in the previous fiscal. The non-corporate tax collections surged to Rs 13.73 trillion from Rs 11.68 trillion last fiscal year. After accounting for refunds, the net direct tax collection stood at Rs 22.26 trillion in 2024-25, reflecting a 13.57% YoY increase compared to Rs 19.60 trillion in the same period last year. Goods and Services Tax (GST) collection rose 12.6 % YoY to an all-time high of about Rs 2.37 trillion in April 2025 against Rs 2.10 trillion during in April 2024. After adjusting refunds, net GST collection rose 9.1% YoY to over Rs 2.09 trillion in April 2025 against Rs 1.92 trillion in April 2024. As per data from the Ministry of Commerce and Industry, India's merchandise trade deficit for March 2025 was USD 21.54 bn against USD 14.05 bn in the previous month and compared with economists' forecast of USD 15.5 bn. Merchandise exports stood at USD 41.97 bn in March 2025 against USD 36.91 bn in February 2025, while imports were higher at USD 63.51 bn compared with USD 50.96 bn over the same period.


The liquidity condition as measured by RBI’s net LAF eased in April as it turned to surplus on the back of seasonality wearing off, higher government spending and lower currency leakage. Retail inflation in India has eased further as the Consumer Price Index (CPI) has fallen to 3.34% YoY in March 2025 from 3.61% YoY in February 2025, the lowest number since August 2019. Issues on the external front, in terms of rising trade deficit, geopolitics and risk related to US tariff wars remain a key challenge for the RBI to negotiate with in the medium term and can have implication on the depth of the ongoing policy rate cut cycle. Though IMD has predicted above normal monsoon, weather vagaries need to be watched out for as there are predictions of rising temperature along with the onset of early summer which may pose upside risk to food inflation. In the US, Tariff led uncertainty has taken center stage. Going forward, further development on tariff front remains a key monitorable for global capital flows and market sentiments.


RBI’s MPC has taken a pro-growth approach by cutting the policy rates for a second time in succession. This was already factored in by the bond market, leading to substantial decline in G-sec yields across the curve. Hence, incremental opportunity in long duration seems limited at this juncture. Easing liquidity conditions basis RBI measures have flattened the corporate bond yields at the shorter end in the medium term. Further easing of liquidity may normalize corporate bond yield curve, making the case for investment into corporate bonds at the 1-4-years segment of the curve. Hence, investors can look at Corporate Bond Funds for a horizon of 15 months and above. For a horizon of 24 months and above, investors may consider Income Plus Arbitrage FoF. For a horizon of 3 months and above, investors can consider Arbitrage Funds. Whereas for a horizon of up to 3 months, investors can consider Overnight Funds and Liquid Funds. Investors can also look at Multi-asset allocation funds for a horizon of 36 months and above. Investors should invest in line with their risk profile and product suitability.


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