March 28, 2025 1-Month
1-Year
Rupees per Dollar 85.46 87.36 83.40
Oil (dollars per barrel) 73.63 71.62 87.48
Retail inflation (CPI) 3.61% (Feb) 4.26% 5.09%
Security Yield
Security Yield
  • US Federal Reserve (Fed) is expected to keep the fed rate unchanged at 4.25%-4.50% during its March meeting. The probability of a US recession has increased and markets are pricing in 75 bps of rate cuts during 2025. European Central Bank (ECB) cut its policy rates by 25 bps to 2.50% and Bank of England (BoE) cut its policy rate by 25 bps to 4.50%
  • RBI announced further Open Markets Operations (OMO) to purchase ₹ 800 billion of government securities in four tranches of ₹200 billion each
  • The government announced the borrowing program for H1-FY2026 at 54% of its gross borrowings for the year (₹14.8 trillion). RBI also announced State Development Loans (SDL’s) borrowings at ₹2.73 trillion for Q1-FY2026
  • We remain ‘neutral’ on the outlook for bond markets
    • We expect the RBI to cut the repo rate by 25 bps
    • The OMO’s and FX swaps undertaken by the RBI will ensure durable liquidity remains surplus going forward, which will be supportive for the short-medium term segment. We expect the 10 year G-sec yield to trade in a range of 6.40%-6.60% in the near term
    • Market will be watchful of global developments and its impact on the exchange rate
Security Yield
Index 1 month (%) 1 year (%) 3 years (%)
NIFTY50 6.30 5.34 10.43
BSE100 6.96 5.51 11.51
NIFTY500 7.34 5.35 12.73
NIFTY Midcap100 7.84 7.48 20.28

At March 31, 2025

Nifty was up 6.3 % for the month of March 2025

  • After correction witnessed during the last few months, markets bounced back in March 2025
  • FIIs turned buyers during March 2025 and DII flows continued to remain positive
  • Within BSE 100 index, amongst sectors Finance/Bank outperformed while Capital Goods/Technology underperformed the broader market

Our outlook has changed to Neutral in the short term while the medium term remains positive

  • Earnings growth has been weak during the last few quarters
  • Uncertainty related to tariff wars and geopolitical risks could impact growth and capital flows in the near term
  • However, with a more accommodative stance from RBI and measures undertaken by the government, we should see a gradual pick up in growth
  • The Nifty’s P/E at 22x for FY2025E and 20x for FY2026E is trading near its 5-year average
  • We have changed our short-term stance to Neutral with a bias towards large-caps

In the medium term, we expect certain important drivers for growth:

  • India benefits from structural levers in the form of demographic benefits, rising formalisation, manufacturing focus and digitisation
  • Corporate balance sheets remain strong which positions them well for the next leg of growth
  • Earnings trajectory will be key monitorable over medium term

Market consensus for Nifty earnings CAGR over FY2025-FY2027 at 14%

 

COMP/DOC/Apr/2025/74/0002
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