Market Outlook - March 2025

Market Update

Indian equities registered its fifth consecutive monthly loss In February 2025. Sentiment was visibly pessimistic, and losses were widespread. While Nifty index continued decline by 5.9% for the month, the broader markets saw sharper declines with the midcap and small cap indices down 10.8% and 13.1% respectively. All the sectors ended the month in red; with Capital Goods, PSU and Real estate falling the most by 14.4%, 13.5% and 13.4%, respectively. Key domestic developments included the Union Budget which saw continued government’s focus on fiscal consolidation while providing a boost to consumption by way of tax cuts. The RBI started off the rate-cut cycle with a 25-bps cut in repo rate to 6.25%, after being on a pause for 24 months. It also reduced risk weights for bank financing to NBFCs and microfinance loans. BJP won the Delhi legislative assembly elections with 48 out of 70 seats, marking its return to power in the capital after 27 years. On the investment front, Foreign Portfolio Investors (FPIs) sold $4.7 billion of Indian equities in secondary market by February 27. Domestic Institutional Investors (DIIs) were net buyers, acquiring $6 billion worth of stocks by the end of the month. Meanwhile, global markets saw mixed results: Indonesia recorded a significant loss of (-11.8%), while Thailand (-8.4%) and Japan (-6.1%) also experienced declines. On the positive side, markets in Hong Kong (+13.4%), Germany (+3.8%), and Mexico (+3.0%) saw gains.