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 threat sentiment, and renewed international inflows. Technical components like oversold situations and expectations of an earnings revival additionally aided the bounce-back.
FIIs, who had been internet sellers within the early a part of March, turned aggressive consumers within the latter half, contributing $3.6 billion of internet inflows. General, FIIs invested $975 million in the course of the month, whereas DIIs added $4.3 billion, reflecting robust 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 robust sectoral good points, pushed by cyclical and government-linked themes. Defence and public sector enterprises led the charts, posting sharp double-digit returns. Vitality, commodities, railways, and capital markets additionally delivered sturdy efficiency, supported by elevated infrastructure spending and enhancing macro cues. On the flip facet, actual property funding trusts (REITs) had been the one notable laggards in the course of the month.
Over the previous yr, 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 threat, sectors akin to metals and actual property continued to exhibit excessive volatility, whereas FMCG, healthcare, and pharma supplied 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 traders. General, 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 development 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 growth in two-wheelers, low-to-mid single-digit development in passenger and business autos, and low-teens development in tractors. Nonetheless, EBITDA margins are more likely to stay flat YoY, weighed down by greater reductions, promotional prices, and unfavorable working leverage, regardless of value hikes taken over the previous yr.
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 growth of ~77 bps and ~27 bps, respectively, whereas Bajaj might witness a ten bps contraction. Maruti’s margin is more likely to decline by 44 bps YoY because of greater advert spends, deeper reductions, and a rising CNG combine. Escorts Kubota might even see a sequential margin dip owing to consolidation-related impacts, whereas Ashok Leyland is predicted to put up a 42 bps YoY margin uptick aided by price 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 because of one-offs, although a ~14% sequential enchancment is predicted.
Section-wise, Endurance Tech is more likely to profit from stronger 2W manufacturing and ABS/alloy wheel ramp-up, whereas Automotive Axles might see ~3.5% YoY development pushed by MHCV demand. Uno Minda might clock ~16% YoY development, led by sturdy 2W volumes and new orders. Sansera Engineering might put up 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 might even see low-to-mid single-digit development, whereas PV gross sales might average because 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 parts. This transfer, if applied, might materially affect export volumes for a number of Indian OEMs and ancillary suppliers. The uncertainty round this commerce motion poses a draw back threat to FY26 earnings, particularly for companies 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 degree 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 because of sluggish home consumption. The latest imposition of US tariffs is predicted to disturb world commerce flows, probably 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 higher uncooked materials provide. In distinction, copper costs climbed 3.8% MoM to $9,710 per tonne, pushed by fears of commerce disruptions because 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 affect might stay muted as this responsibility doesn’t apply to international locations 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 might reshape commerce patterns, intensifying competitors in importing international locations, together with India. Enter price pressures might stick with rising iron ore costs, although some reduction might come from declining coking coal costs. Regardless of these blended 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 beneath strain because of subdued world demand, intensified competitors—particularly from China—and ongoing macroeconomic uncertainty. Within the March quarter, most corporations are anticipated to report development led by greater volumes, however margin enchancment might stay restricted because of persistent pricing challenges. Whereas costs of many specialty chemical compounds have stabilised, a sustained uptrend continues 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 development is more likely to acquire traction within the coming monetary yr, with corporations 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 trade continues to be dealing with weak demand and provide chain constraints, which is affecting the consumption of chemical compounds utilized in automobile manufacturing. A gradual restoration is feasible, although contingent on macroeconomic stability. The textile sector, then again, is grappling with overcapacity and tender export orders, creating a troublesome pricing atmosphere for associated specialty chemical compounds. A rebound on this section will possible hinge on world consumption tendencies.
Choose molecules like ATBS proceed to point out structural power, with wholesome demand and secure pricing supporting additional capability growth. In the meantime, segments like fluorochemicals have seen renewed curiosity following latest value strikes, prompting the resumption of sure stalled growth initiatives.
General, specialty chemical corporations are anticipated to put up robust topline development supported by capability additions and diversification past agrochemicals. Nonetheless, margin pressures persist because of an unfavourable product combine and subdued realisations. Whereas just a few gamers are more likely 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 compounds.
Valuation-wise, most corporations 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 corporations exhibiting wholesome quantity traction, diversified product portfolios, and robust execution in high-growth segments.
Banking/Finance:
The Indian banking sector entered Q4FY25 dealing with headwinds from slowing financial momentum, muted authorities expenditure, and cautious regulatory stances on retail credit score dangers. Systemic credit score development 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 development 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 development narrowed considerably to only 0.5% by March-end, in comparison with over 6% firstly of FY25.
The Reserve Financial institution’s latest 25 bps price minimize initiated the easing cycle, and one other comparable minimize is anticipated. Nonetheless, the impact of decrease repo charges is predicted to weigh on yields, particularly for banks with the next proportion of floating-rate loans, whereas funding prices have remained agency. In consequence, internet curiosity margins (NIMs) are more likely to contract by 4–12 foundation factors in Q4FY25. Bigger and PSU banks might even see marginal affect, whereas mid-sized banks and small finance banks might face sharper strain.
Price earnings tendencies are anticipated to be wholesome, supported by seasonality, whereas treasury efficiency might fluctuate. Working bills are more likely to stay beneath 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%, probably capping general profitability good points.
Within the NBFC house, disbursement exercise picked up sequentially in Q4FY25, supporting sturdy development in property beneath administration (AUM). Car financiers led the cost with AUM development close to 22% YoY, whereas diversified financiers noticed round 26% development. Margins stayed secure for housing finance gamers, with slight upward tendencies seen in automobile 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, reasonably priced housing financiers maintained wholesome disbursement momentum, with regular margins and enhancing asset high quality. Gold financiers confirmed muted AUM development, however their core mortgage ebook remained robust. Diversified NBFCs and automobile financiers seem well-positioned for sustained earnings, supported by secure credit score prices and managed asset high quality metrics.
Trying forward, investor focus will stay on deposit mobilisation tendencies, the trajectory of unsecured mortgage portfolios, and the potential affect of additional price cuts on sectoral margins and profitability.
Vital occasions & updates
A couple of essential occasions of the final month and upcoming ones are as beneath:
- The RBI decreased the repo price by 25bps to six% in April, marking a second consecutive minimize amid cooling inflation, slower development, 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 international locations besides China, citing investor strain and bond market volatility. Throughout this era, a decrease 10% tariff will apply. Nonetheless, tariffs on China had been sharply raised to 125% because 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 development in 20 months and continued service sector growth.
- India’s Providers 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 development. Overseas gross sales grew at their weakest tempo since December 2023.
Basic outlook:
The RBI’s April financial coverage choice marked a pivotal flip in its coverage route, with a 25 bps repo price minimize to six% and a transparent shift in stance from ‘impartial’ to ‘accommodative’. This transfer builds on the sooner minimize in February and displays the central financial institution’s rising consolation with the inflation trajectory, permitting it to pivot in the direction of supporting development amidst rising world uncertainties.
The CPI inflation forecast for FY26 was revised all the way down to 4% from 4.2%, owing to components 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 development 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 important draw back dangers to India’s exports, significantly in sectors like engineering items, electronics, pharma, and textiles. Nonetheless, home development 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 potential for one other 50 bps in price cuts, ought to development falter or inflation stay subdued. The actual coverage price now stands at 2% (repo at 6% minus anticipated inflation of 4%), leaving sufficient room for relieving. The central financial institution indicated that, beneath the accommodative stance, charges might even fall beneath the estimated impartial actual price of 1.5%, if obligatory.
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 risky capital flows, significantly international 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 development 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 price cuts possible, bonds are poised to increase their good points. 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 important FPI outflows ($17.2 billion internet YTD in equities), reflecting world threat aversion amid commerce tensions and financial divergence. Nonetheless, home institutional traders and a liquidity-friendly atmosphere have helped cushion giant drawdowns. Charge-sensitive sectors akin to financials, actual property, autos, and client 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 sturdy retail gross sales, a pick-up in housing and automobile registrations, and robust financial institution credit score development. These fundamentals, coupled with RBI’s supportive coverage measures, might set off a reduction rally in equities, particularly in segments aligned with home consumption and infrastructure.
On the forex entrance, the INR stays weak because of capital outflows and exterior uncertainties. Nonetheless, RBI’s lively interventions by way of USD/INR swaps and bond purchases have thus far stabilised the rupee inside a manageable band. In accordance with the Financial Coverage Report, a 5% depreciation within the INR from the baseline (₹86/USD) might increase inflation by 35 bps, a threat the central financial institution is monitoring carefully.
From a technical standpoint, the Nifty and Sensex have entered a consolidation section following latest volatility. Key help for the Nifty lies close to 21,700–21,800, whereas a decisive breakout above 23,200 might 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 financial system is getting into a difficult section as sweeping new tariffs, introduced in early April, set off a major shift within the macroeconomic atmosphere. The efficient tariff price has surged from round 2% final yr to over 20% right now—the best degree seen in additional than a century. These measures, which embrace a ten% common import tax and reciprocal tariffs starting from 11% to 50% on choose buying and selling companions, now cowl practically 80% of US imports. Whereas some moderation is predicted, with the efficient price probably settling round 15% by means of 2026, the near-term affect 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 because of rising enter and completed product prices. Companies are at the moment working by means of inventories stockpiled forward of the tariffs, however as these buffers fade, value hikes are more likely to intensify. Whereas providers inflation could also be extra muted because of softer labour and demand dynamics, general inflation is predicted to remain properly above the Fed’s 2% goal by means of 2026.
Client sentiment has already taken successful. Confidence indicators fell sharply in March, reaching a 12-year low amid rising considerations over tariffs and enterprise situations. Actual client 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 customers rush to beat value will increase, however it will possible be short-lived. By the second half of the yr, consumption is predicted to contract extra broadly, particularly for sturdy items.
The enterprise funding outlook has additionally dimmed. Tools spending noticed a short lived enhance in Q1—largely because of a rebound in plane shipments and pre-tariff buying—however capital expenditure is predicted to weaken considerably going ahead. Uncertainty round commerce and monetary 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 information counsel weaker employment throughout each manufacturing and providers. Mixed with efforts to shrink the federal workforce, layoffs are projected to extend. Nonfarm payrolls are anticipated to fall by a mean of fifty,000 jobs monthly in H2, pushing the unemployment price as much as round 4.7% by early 2026. A gradual labour market restoration is anticipated in 2026 as decrease rates of interest and monetary 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 components. The Fed is predicted to start slicing charges from June, with 5 25 bps reductions projected by year-end, bringing the federal funds price down to three.00%–3.25%. Quantitative tightening is more likely to proceed by means of 2025 earlier than halting. Treasury yields are forecast to climb modestly, reaching 3.75% by December and 4.15% by end-2026, reflecting inflation threat and monetary 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 might modestly delay the looming debt ceiling “X date,” now anticipated round August.
In abstract, 2025 is shaping as much as be a turbulent yr for the US financial system, with elevated inflation, weakening development, and heightened coverage uncertainty. The mix of rising prices, cautious customers, and a softening labour market factors to a stagflationary backdrop. Whereas coverage easing might supply some reduction, a extra sturdy restoration is predicted to unfold solely in 2026, as soon as inflation cools and monetary 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 degree that’s drawing consideration throughout markets. This sharp uptick coincided with Mahavir Jayanti, a festive interval when gold demand historically sees a lift because of cultural and seasonal shopping for patterns.
Nonetheless, the home rally is carefully tied to world components. Worldwide gold costs spiked in response to heightened geopolitical tensions, significantly the renewed commerce struggle rhetoric between the US 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 might spur inflation and dampen world development have pushed traders 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.
Trying forward, the outlook for gold stays constructive within the medium time period. Demand in India is more likely to keep elevated by means of the continuing festive season and into the marriage months. Globally, if geopolitical friction and financial coverage shifts proceed to drive volatility, gold might preserve its upward trajectory. Whereas short-term corrections are potential, the underlying drivers of inflation fears, forex instability, and monetary market stress proceed to make gold a gorgeous 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 corporations with robust fundamentals. Nonetheless, we’re holding again from aggressive allocations and adopting a extra measured stance till there may be better readability on company earnings and coverage route.
Alternatively, we have now paused contemporary investments in US equities. Whereas the latest 90-day pause in US tariffs gives momentary reduction, it doesn’t deal with 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 reduction 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 development 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 choice.
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