By Analysis desk
March 2025 Market Efficiency Recap:
Indian equities witnessed a powerful rebound in March 2025, reversing the sharp correction seen within the previous months. The Nifty 50 climbed 6.31% in the course of the month, recovering a part of the 16% decline from its all-time excessive of 26,216 in September 2024 to the February 2025 low. The broader market outperformed the benchmark, with the Nifty Subsequent 50 gaining 10.55%, Nifty Midcap 100 rising 7.85%, Smallcap index up 9.50%, and the Microcap 250 advancing 6.19%. The restoration was broad-based, pushed by a mixture of easing world headwinds — together with softening bond yields and a weaker greenback — improved danger sentiment, and renewed overseas inflows. Technical elements like oversold circumstances and expectations of an earnings revival additionally aided the bounce-back.
FIIs, who have been internet sellers within the early a part of March, turned aggressive consumers within the latter half, contributing $3.6 billion of internet inflows. Total, FIIs invested $975 million in the course of the month, whereas DIIs added $4.3 billion, reflecting sturdy home participation. This turnaround in sentiment pushed FII shareholding in Indian equities to 16.8% in March, up from 15.9% in February.
Sectoral efficiency
March 2025 noticed sturdy sectoral features, pushed by cyclical and government-linked themes. Defence and public sector enterprises led the charts, posting sharp double-digit returns. Power, commodities, railways, and capital markets additionally delivered strong efficiency, supported by elevated infrastructure spending and bettering macro cues. On the flip facet, actual property funding trusts (REITs) have been the one notable laggards in the course of the month.
Over the previous 12 months, financials, healthcare, and choose manufacturing-linked sectors have proven regular efficiency, whereas pockets like media, oil & fuel, and public sector banks trailed. When it comes to danger, sectors akin to metals and actual property continued to exhibit excessive volatility, whereas FMCG, healthcare, and pharma offered comparatively secure returns.
Valuations remained elevated in consumption-driven segments like durables and FMCG, whereas sectors akin to oil & fuel and telecom appeared extra attractively priced. Moreover, segments providing constant money flows and wholesome dividend yields—like vitality and IT—remained in favour with long-term buyers. Total, the sectoral development mirrored a steadiness between momentum-driven rallies and a selective seek for worth.
Within the following sections, we offer a extra complete examination and detailed insights of some main sectors:
Auto:
The auto sector wrapped up Q4FY25 with modest progress throughout key metrics. OEMs are anticipated to report YoY income, EBITDA, and PAT, respectively. The expansion was fuelled by mid-to-high single-digit quantity enlargement in two-wheelers, low-to-mid single-digit progress in passenger and industrial autos, and low-teens progress in tractors. Nonetheless, EBITDA margins are prone to stay flat YoY, weighed down by greater reductions, promotional prices, and destructive working leverage, regardless of value hikes taken over the previous 12 months.
Sequentially, income/EBITDA/PAT are projected to rise with a modest 21 bps enchancment in EBITDA margins. Inside OEMs, TVS and Hero are anticipated to see YoY margin enlargement of ~77 bps and ~27 bps, respectively, whereas Bajaj might witness a ten bps contraction. Maruti’s margin is prone to decline by 44 bps YoY as a consequence of greater advert spends, deeper reductions, and a rising CNG combine. Escorts Kubota may even see a sequential margin dip owing to consolidation-related impacts, whereas Ashok Leyland is predicted to submit a 42 bps YoY margin uptick aided by value controls and working leverage.
For auto ancillaries, income and EBITDA are anticipated to rise YoY, supported by greater 2W and tractor volumes and premiumisation in PVs. QoQ, income and EBITDA might develop with margins increasing aided by secure commodity prices and working leverage. YoY PAT might stay flat as a consequence of one-offs, although a ~14% sequential enchancment is predicted.
Phase-wise, Endurance Tech is prone to profit from stronger 2W manufacturing and ABS/alloy wheel ramp-up, whereas Automotive Axles may see ~3.5% YoY progress pushed by MHCV demand. Uno Minda might clock ~16% YoY progress, led by strong 2W volumes and new orders. Sansera Engineering may submit a ~5.4% YoY uptick, supported by aerospace and home 2W segments.
Enter prices largely remained secure, with flat metal and lead costs. Aluminium and copper costs rose ~2% QoQ, whereas palladium declined 4%. Rhodium rose ~6%, and platinum was regular.
Going ahead, tractors are anticipated to outperform supported by beneficial monsoons and rural restoration. 2Ws and CVs may even see low-to-mid single-digit progress, whereas PV gross sales might average as a consequence of a excessive base, barring contemporary traction from new SUV launches. Entry-level PV demand might stay tepid.
A major overhang is the proposed 25% tariff on all auto imports into the US, which incorporates Indian-made autos and elements. This transfer, if carried out, may materially impression export volumes for a number of Indian OEMs and ancillary suppliers. The uncertainty round this commerce motion poses a draw back danger to FY26 earnings, particularly for corporations with significant US publicity.
Metals:
Indian metal costs noticed a pointy 7.7% MoM rise in March 2025, reaching ₹52,000 per tonne, whereas Chinese language metal costs declined by 1.1% MoM to $470 per tonne. On the uncooked materials entrance, coking coal costs dropped by 2.1% MoM to $139 per tonne — the bottom stage since Could 2021. In February 2025, India’s metal manufacturing declined 6.6% MoM to 12.7 million tonnes, whereas China’s estimated output dropped by 3.7% to 79 million tonnes. World metal manufacturing was additionally decrease by 4.4% MoM at 145 million tonnes. Though Chinese language metal exports declined 10% MoM, they nonetheless rose 12% YoY to eight million tonnes as a consequence of sluggish home consumption. The current imposition of US tariffs is predicted to disturb world commerce flows, doubtlessly leading to diverted metal shipments discovering their method into markets like India.
Metal uncooked materials costs: Home iron ore charges rose 4.3% MoM in March 2025 to ₹7,300 per tonne, whereas world costs slipped 1.5% MoM to $97 per tonne. Manganese additionally noticed a 3% MoM rise to ₹18,429 per tonne.
Non-ferrous metals: Aluminium costs dropped by 3.9% MoM to $2,518 per tonne owing to raised uncooked materials provide. In distinction, copper costs climbed 3.8% MoM to $9,710 per tonne, pushed by fears of commerce disruptions as a consequence of US tariffs. Zinc rose 2.7% MoM, backed by industrial demand and output points from main producers.
The spike in Indian metal costs throughout March was largely because of the proposed 12% safeguard responsibility. Nonetheless, the general impression might stay muted as this responsibility doesn’t apply to nations with which India has FTAs, like Japan, Korea, and Nepal — collectively accounting for over 60% of India’s metal imports in February 2025. In parallel, the massive upcoming capability additions within the home market are anticipated to maintain a lid on metal costs. On the worldwide entrance, tender Chinese language demand and the US’s blanket 25% import tariff on metal may reshape commerce patterns, intensifying competitors in importing nations, together with India. Enter value pressures might stick with rising iron ore costs, although some aid might come from declining coking coal costs. Regardless of these combined cues, stretched inventory valuations proceed to restrict the sector’s upside potential. As such, we preserve a impartial stance on the metal house.
Chemical compounds:
The chemical sector continues to witness a volume-driven restoration, though pricing stays below strain as a consequence of subdued world demand, intensified competitors—particularly from China—and ongoing macroeconomic uncertainty. Within the March quarter, most firms are anticipated to report progress led by greater volumes, however margin enchancment might stay restricted as a consequence of persistent pricing challenges. Whereas costs of many specialty chemical substances have stabilised, a sustained uptrend remains to be elusive.
Inside agrochemicals, a gradual however regular restoration is anticipated, aided by new product introductions and the rising shift towards sustainable agriculture. Quantity progress is prone to acquire traction within the coming monetary 12 months, with firms investing in innovation to fulfill evolving farming wants. The pharma section stays supportive of demand, as Indian drug makers scale up manufacturing to capitalise on alternatives arising from patent expirations.
Nonetheless, demand within the automotive and textile sectors stays uneven. The auto business remains to be going through weak demand and provide chain constraints, which is affecting the consumption of chemical substances utilized in car manufacturing. A gradual restoration is feasible, although contingent on macroeconomic stability. The textile sector, however, is grappling with overcapacity and tender export orders, creating a tricky pricing atmosphere for associated specialty chemical substances. A rebound on this section will doubtless hinge on world consumption tendencies.
Choose molecules like ATBS proceed to point out structural energy, with wholesome demand and secure pricing supporting additional capability enlargement. In the meantime, segments like fluorochemicals have seen renewed curiosity following current value strikes, prompting the resumption of sure stalled enlargement tasks.
Total, specialty chemical firms are anticipated to submit sturdy topline progress supported by capability additions and diversification past agrochemicals. Nonetheless, margin pressures persist as a consequence of an unfavourable product combine and subdued realisations. Whereas a couple of gamers are prone to profit from segment-specific tailwinds in pharma, polymers, or superior intermediates, others might proceed to face headwinds in segments like SDAs or primary chemical substances.
Valuation-wise, most firms are buying and selling near their long-term averages, reflecting a cautious investor stance. Till pricing restoration turns into extra seen, margin pressures might persist, limiting near-term upside. For now, the main target stays on firms exhibiting wholesome quantity traction, diversified product portfolios, and robust execution in high-growth segments.
Banking/Finance:
The Indian banking sector entered Q4FY25 going through headwinds from slowing financial momentum, muted authorities expenditure, and cautious regulatory stances on retail credit score dangers. Systemic credit score progress decelerated to roughly 11% YoY as of March 2025, down sharply from 20.5% in FY24. This moderation was largely pushed by a slowdown in unsecured lending, tighter liquidity, and efforts by banks to realign their loan-to-deposit ratios (LDRs).
Public sector banks remained extra aggressive in extending credit score, significantly throughout retail, MSME, and company segments, whereas non-public banks prioritised deposit mobilisation and steadiness sheet self-discipline. Deposit progress additionally softened to 10.3% YoY, with continued strain on CASA (present and financial savings account) mobilisation and rising reliance on time period deposits. The hole between credit score and deposit progress narrowed considerably to only 0.5% by March-end, in comparison with over 6% initially of FY25.
The Reserve Financial institution’s current 25 bps fee reduce initiated the easing cycle, and one other comparable reduce is anticipated. Nonetheless, the impact of decrease repo charges is predicted to weigh on yields, particularly for banks with a better proportion of floating-rate loans, whereas funding prices have remained agency. In consequence, internet curiosity margins (NIMs) are prone to contract by 4–12 foundation factors in Q4FY25. Bigger and PSU banks may even see marginal impression, whereas mid-sized banks and small finance banks may face sharper strain.
Charge revenue tendencies are anticipated to be wholesome, supported by seasonality, whereas treasury efficiency may range. Working bills are prone to stay below management, and pre-provision working revenue (PPOP) is predicted to develop modestly. Asset high quality throughout most banks is seen holding regular, although mid-tier and smaller banks with greater publicity to microfinance and bank card portfolios might proceed to face stress. Slippages in unsecured segments stay a priority, and credit score prices are anticipated to rise sequentially by round 16%, doubtlessly capping general profitability features.
Within the NBFC house, disbursement exercise picked up sequentially in Q4FY25, supporting strong progress in property below administration (AUM). Automobile financiers led the cost with AUM progress close to 22% YoY, whereas diversified financiers noticed round 26% progress. Margins stayed secure for housing finance gamers, with slight upward tendencies seen in car finance. Nonetheless, diversified and gold mortgage NBFCs might have skilled marginal NIM compression.
Asset high quality remained broadly secure throughout most NBFCs, although the microfinance section continued to face elevated stress, significantly in geographies like Karnataka. Whereas slippages remained excessive, there are early indicators that stress could also be plateauing. In distinction, inexpensive housing financiers maintained wholesome disbursement momentum, with regular margins and bettering asset high quality. Gold financiers confirmed muted AUM progress, however their core mortgage guide remained sturdy. Diversified NBFCs and car financiers seem well-positioned for sustained earnings, supported by secure credit score prices and managed asset high quality metrics.
Wanting forward, investor focus will stay on deposit mobilisation tendencies, the trajectory of unsecured mortgage portfolios, and the potential impression of additional fee cuts on sectoral margins and profitability.
Essential occasions & updates
A number of essential occasions of the final month and upcoming ones are as under:
- The RBI decreased the repo fee by 25bps to six% in April, marking a second consecutive reduce amid cooling inflation, slower progress, and world commerce tensions. It additionally trimmed the FY26 GDP forecast to six.5% and lowered inflation projections to 4%, staying inside its goal vary.
- US President Trump introduced a 90-day pause on the newly proposed reciprocal tariffs for all nations besides China, citing investor strain and bond market volatility. Throughout this era, a decrease 10% tariff will apply. Nonetheless, tariffs on China have been sharply raised to 125% as a consequence of retaliatory actions and commerce tensions. The US goals to isolate China whereas negotiating separate commerce offers with different nations, together with India, which is working towards a partial bilateral settlement. India can be pursuing commerce pacts with the EU and UK, whereas making ready stricter anti-dumping measures to counter Chinese language imports.
- India’s Manufacturing PMI for March 2025 was revised upward to 58.1, beating each the flash estimate (57.6) and February’s studying (56.3). This marks the strongest efficiency since July 2024, pushed by sharp rises in new orders, output, and buying exercise.
- India’s Composite PMI rose to 59.5 in March 2025, an eight-month excessive, pushed by the strongest manufacturing unit progress in 20 months and continued service sector enlargement.
- India’s Companies PMI was revised to 58.5 in March 2025, down from 59.0 in February, signalling a slight slowdown however marking 44 straight months of progress. Overseas gross sales grew at their weakest tempo since December 2023.
Basic outlook:
The RBI’s April financial coverage resolution marked a pivotal flip in its coverage path, with a 25 bps repo fee reduce to six% and a transparent shift in stance from ‘impartial’ to ‘accommodative’. This transfer builds on the sooner reduce in February and displays the central financial institution’s rising consolation with the inflation trajectory, permitting it to pivot in direction of supporting progress amidst rising world uncertainties.
The CPI inflation forecast for FY26 was revised right down to 4% from 4.2%, owing to elements like a beneficial rabi harvest, assumptions of a standard monsoon, easing family expectations, and a excessive base from FY25. Meals and beverage inflation noticed a pointy decline, falling from 9.7% in October 2024 to three.8% in February 2025, the bottom since Could 2023. In the meantime, core inflation (ex-food and gasoline) inched up barely to 4% in February from 3.8% in January.
The RBI’s progress estimate for FY26 was trimmed to six.5% (from 6.7%), reflecting considerations about trade-related disruptions following the reciprocal tariff actions by the US, which pose vital draw back dangers to India’s exports, significantly in sectors like engineering items, electronics, pharma, and textiles. Nonetheless, home progress drivers akin to improved non-public consumption (city and rural), rising capability utilisation, authorities capex, and robust steadiness sheets of banks and corporates supply some resilience.
Importantly, the RBI has acknowledged the opportunity of one other 50 bps in fee cuts, ought to progress falter or inflation stay subdued. The actual coverage fee now stands at 2% (repo at 6% minus anticipated inflation of 4%), leaving sufficient room for alleviating. The central financial institution indicated that, below the accommodative stance, charges may even fall under the estimated impartial actual fee of 1.5%, if mandatory.
On the exterior entrance, India’s present account deficit stays modest at 0.7% of GDP for FY25. But, the steadiness of funds faces stress from unstable capital flows, significantly overseas portfolio funding (FPI) outflows of $18.9 billion between October 2024 and March 2025, reversing the inflows of $21.6 billion within the previous six months. These outflows have weighed on the rupee, which is additional uncovered to strain because of the rate of interest differential with US Treasuries.
The RBI has been proactive in managing liquidity and sustaining monetary stability. It infused ₹6.8 trillion in sturdy liquidity from January to March 2025 by way of open market operations (₹2.8T), time period repo (₹1.8T), and USD/INR swaps (₹2.2T). In consequence, system liquidity moved into surplus by end-March, supporting credit score transmission and softer market charges.
In sum, the coverage outlook now prioritises sustaining the expansion restoration whereas remaining watchful of inflation dangers from forex depreciation, climate shocks, or geopolitical tensions. The RBI’s flexibility, backed by beneficial inflation dynamics and a reputable progress framework, units the stage for extra supportive coverage motion if wanted.
Technical outlook.
The Indian bond market has responded positively to the RBI’s dovish pivot. The benchmark 10-year G-Sec yield fell 21 bps YTD in 2025, bolstered by constant OMO purchases, falling crude oil costs (Brent down ~8.8% between Jan–Mar 2025), and softening US Treasury yields. With inflation anticipated to hover close to the 4% goal, and additional fee cuts doubtless, bonds are poised to increase their features. Moreover, India’s inclusion in world bond indices has attracted $16.9 billion in internet debt inflows YTD, enhancing help for sovereign debt devices.
Fairness markets, in the meantime, have seen vital FPI outflows ($17.2 billion internet YTD in equities), reflecting world danger aversion amid commerce tensions and financial divergence. Nonetheless, home institutional buyers and a liquidity-friendly atmosphere have helped cushion giant drawdowns. Charge-sensitive sectors akin to financials, actual property, autos, and shopper discretionary may benefit from decrease borrowing prices and a rebound in credit score demand.
Regardless of macro headwinds, the home demand story stays intact, with strong retail gross sales, a pick-up in housing and car registrations, and robust financial institution credit score progress. These fundamentals, coupled with RBI’s supportive coverage measures, may set off a aid rally in equities, particularly in segments aligned with home consumption and infrastructure.
On the forex entrance, the INR stays weak as a consequence of capital outflows and exterior uncertainties. Nonetheless, RBI’s lively interventions by way of USD/INR swaps and bond purchases have to date stabilised the rupee inside a manageable band. In keeping with the Financial Coverage Report, a 5% depreciation within the INR from the baseline (₹86/USD) may increase inflation by 35 bps, a danger the central financial institution is monitoring carefully.
From a technical standpoint, the Nifty and Sensex have entered a consolidation section following current volatility. Key help for the Nifty lies close to 21,700–21,800, whereas a decisive breakout above 23,200 may set off short-term upside, main resistance leve is 23800. For bond markets, continued RBI help suggests decrease yields within the medium time period, making long-duration bonds engaging.
Outlook for the World Market
US Market:
The US economic system is coming into a difficult section as sweeping new tariffs, introduced in early April, set off a big shift within the macroeconomic atmosphere. The efficient tariff fee has surged from round 2% final 12 months to over 20% in the present day—the best stage seen in additional than a century. These measures, which embody a ten% common import tax and reciprocal tariffs starting from 11% to 50% on choose buying and selling companions, now cowl almost 80% of US imports. Whereas some moderation is predicted, with the efficient fee presumably settling round 15% by 2026, the near-term impression is clearly stagflationary.
The fast consequence of this coverage shift is a pointy rise in inflation. Core PCE inflation is projected to climb to three.3% year-over-year by the tip of 2025, with value pressures concentrated in items as a consequence of rising enter and completed product prices. Companies are at present working by inventories stockpiled forward of the tariffs, however as these buffers fade, value hikes are prone to intensify. Whereas companies inflation could also be extra muted as a consequence of softer labour and demand dynamics, general inflation is predicted to remain nicely above the Fed’s 2% goal by 2026.
Shopper sentiment has already taken a success. Confidence indicators fell sharply in March, reaching a 12-year low amid rising considerations over tariffs and enterprise circumstances. Actual shopper spending declined 0.6% in January and posted solely a 0.1% acquire in February, pointing to Q1 being the weakest quarter for consumption since 2020. A short pick-up in big-ticket gross sales is feasible in Q2 as shoppers rush to beat value will increase, however it will doubtless be short-lived. By the second half of the 12 months, consumption is predicted to contract extra broadly, particularly for sturdy items.
The enterprise funding outlook has additionally dimmed. Gear spending noticed a short lived increase in Q1—largely as a consequence of a rebound in plane shipments and pre-tariff buying—however capital expenditure is predicted to weaken considerably going ahead. Uncertainty round commerce and financial coverage is paralysing long-term planning. Mental property funding might stay comparatively secure, however broader capex is ready to say no.
The labour market, although nonetheless holding up, is starting to point out pressure. Hiring intentions amongst small companies have dropped, job openings are trending decrease, and survey knowledge counsel weaker employment throughout each manufacturing and companies. Mixed with efforts to shrink the federal workforce, layoffs are projected to extend. Nonfarm payrolls are anticipated to fall by a median of fifty,000 jobs monthly in H2, pushing the unemployment fee as much as round 4.7% by early 2026. A gradual labour market restoration is anticipated in 2026 as decrease rates of interest and financial stimulus start to help demand.
On the coverage entrance, the Federal Reserve is strolling a tightrope. Whereas inflation is rising, it’s largely seen as transitory and pushed by supply-side elements. The Fed is predicted to start reducing charges from June, with 5 25 bps reductions projected by year-end, bringing the federal funds fee down to three.00%–3.25%. Quantitative tightening is prone to proceed by 2025 earlier than halting. Treasury yields are forecast to climb modestly, reaching 3.75% by December and 4.15% by end-2026, reflecting inflation danger and financial uncertainties.
When it comes to fiscal coverage, Congress is eyeing tax cuts and new spending measures, although their results might not materialise till 2026. In the meantime, greater tariff revenues may modestly delay the looming debt ceiling “X date,” now anticipated round August.
In abstract, 2025 is shaping as much as be a turbulent 12 months for the US economic system, with elevated inflation, weakening progress, and heightened coverage uncertainty. The mix of rising prices, cautious shoppers, and a softening labour market factors to a stagflationary backdrop. Whereas coverage easing might supply some aid, a extra sturdy restoration is predicted to unfold solely in 2026, as soon as inflation cools and financial stimulus begins to take impact.
Outlook for Gold
Gold costs in India surged dramatically on April 10, with 24K gold in Delhi spiking by ₹29,400 per 100 grams in a single session. The value for 10 grams of 24K gold is now hovering simply ₹6,500 shy of the ₹1,00,000 milestone—a psychological stage that’s drawing consideration throughout markets. This sharp uptick coincided with Mahavir Jayanti, a festive interval when gold demand historically sees a lift as a consequence of cultural and seasonal shopping for patterns.
Nonetheless, the home rally is carefully tied to world elements. Worldwide gold costs spiked in response to heightened geopolitical tensions, significantly the renewed commerce conflict rhetoric between the USA and China. A sudden escalation got here after the US introduced a hike in tariffs on Chinese language imports, rising them from 104% to 125%. Though a 90-day pause was launched for tariff hikes on different nations, investor sentiment had already shifted considerably.
The worldwide monetary atmosphere is more and more risk-averse. Fears that aggressive tariff measures may spur inflation and dampen world progress have pushed buyers away from equities and industrial commodities. As an alternative, capital is flowing into safe-haven property like gold, which tends to outperform in periods of uncertainty.
Wanting forward, the outlook for gold stays optimistic within the medium time period. Demand in India is prone to keep elevated by the continuing festive season and into the marriage months. Globally, if geopolitical friction and financial coverage shifts proceed to drive volatility, gold may preserve its upward trajectory. Whereas short-term corrections are attainable, the underlying drivers of inflation fears, forex instability, and monetary market stress proceed to make gold a lovely hedge in investor portfolios.
What ought to Traders do?
We proceed to comply with a staggered funding technique in Indian equities, specializing in high-quality firms with sturdy fundamentals. Nonetheless, we’re holding again from aggressive allocations and adopting a extra measured stance till there’s better readability on company earnings and coverage path.
However, now we have paused contemporary investments in US equities. Whereas the current 90-day pause in US tariffs presents short-term aid, it doesn’t handle the underlying macroeconomic challenges. The tariff on Indian exports stays elevated at 26%, and the sharp hike in tariffs on Chinese language items to 125% provides additional uncertainty. These developments are already weighing on key Indian export sectors like IT, pharma, and autos.
Although the short-term tariff pause might ease fast pressures, the broader atmosphere stays fragile—particularly with China excluded from the aid and the US election cycle including to coverage unpredictability.
At dwelling, we’re carefully monitoring the upcoming This autumn outcomes to gauge tendencies in consumption, rural demand, and company profitability. The RBI’s downgrade of progress projections and sustained FPI outflows are clear indicators of cautious sentiment within the close to time period.
Disclaimer:
This text shouldn’t be construed as funding recommendation, please seek the advice of your Funding Adviser earlier than making any sound funding resolution.
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