The Month that was : April 2025

Equity markets continued their upward trajectory in April, with the Nifty50 Index gaining 3.5%. Mid-cap and small-cap indices also participated in the rally, rising 4.7% and 2.2%, respectively. Almost all sectors ended in the green, with consumer durables, oil & gas, and FMCG leading the way—each up over 5%. Metals and IT were the only laggards, declining 5.8% and 3%, respectively. Global markets delivered a mixed performance, with Mexico (+6%), Indonesia (+3.9%), and Australia (+3.6%) posting solid gains, while the US (Dow), Hong Kong, and Singapore saw declines of 4.6%, 4.3%, and 3.5%, respectively.

Key developments during the month included the RBI’s announcement of an Open Market Operation (OMO) purchase to infuse liquidity, a 25 bps repo rate cut to 6% along with a shift to an accommodative policy stance, and a relaxation in liquidity coverage ratio (LCR) norms aimed at enhancing credit flow. On the international front, the US President initially announced sweeping reciprocal tariffs but later issued a 90-day pause for all countries except China. The IMF cut India’s FY2026 GDP growth forecast to 6.2%, citing rising global trade tensions. On the positive side, the IMD predicted above-normal monsoon rainfall this year.

FIIs bought USD 936 million in Indian equities, while DIIs were net buyers to the tune of USD 3.1 billion during the month.

Market Outlook

Despite recent positive developments on trade negotiation by USA, global trade tensions remain a significant overhang for equity markets. The rollback of tariffs for countries other than China provides temporary relief, but the broader uncertainty persists. In India, current geopolitical tension with Pakistan creates an additional layer of uncertainty for markets. However, action on FII flow recently suggests that India remains as one of the preferred destinations for investment by FIIs considering its growth-inflation dynamics. India's strong domestic demand and potential positive trade negotiation outcomes with the US may limit downside risks for our markets. Investors should remain cautious yet optimistic, focusing on quality names in sectors like banking, consumer discretionary, and industrials, which are expected to benefit from favorable policy support and stable domestic fundamentals.

Happy Investing!