Fed Pressures,Tariffs and RBI Policy ‼️

Indian equities ended the week in the red, dragged by global uncertainties and a few domestic pressures. The Nifty fell 2.6%, while the Sensex lost over 2,000 points. Bank Nifty, however, held its ground—down just 0.12%—helping limit the broader market damage.

Globally, equity markets saw sharp corrections, and India wasn’t immune. That said, the fall here was relatively contained, possibly because Indian markets had already been underperforming in the past quarter. While the midweek brought some respite, the final trading day saw renewed selling pressure.

The impact was more pronounced in the midcap and small cap segments, especially among export-oriented names, where recent tariff announcements are expected to weigh on profitability.

Market Performance

Here's how the major indices fared:

Index	March 28, 2025	April 04, 2025	% Change
Nifty	23,519.4	22,904.5	-2.61%
Bank Nifty	51,564.8	51,502.7	-0.12%
Midcap Nifty	51,672.3	50,646.0	-1.99%

Sector Performance

Sector-wise, pressure was visible across the board with auto ancillary, IT, and metals bearing the brunt.

Both IT and metals—typically sensitive to global cues—saw notable declines during the week, partly reflecting concerns around external demand and trade-related developments.

On the flip side, domestically driven sectors like FMCG, PSU banks, and media managed to stay afloat, ending the week in the green despite the broader weakness.

Indices	Weekly Change (%)
Nifty IT	-9.15
Nifty Metal	-7.46
Nifty Energy	-3.76
Nifty Realty	-3.32
Nifty Auto	-3.30
Nifty Select Midcap	-3.15
Nifty Pharma	-2.73
Nifty Financial Services	-1.20
Nifty Bank Nifty	-0.12
Nifty PSU Bank	0.06
Nifty FMCG	0.45
Nifty Media	0.90

Weekly Top Gainers (Nifty 500)

Company	Weekly Gain (%)
Vardhman Textiles	19.07
Vodafone Idea	16.32
JSW Holdings	13.01
DB Realty	12.46
Godawari Power	11.57

Weekly Top Losers (Nifty 500)

Company	Weekly Loss (%)
Coforge	-18.12
Uco Bank	-16.24
Persistent Systems	-15.94
Central Bank of India	-15.47
KPIT Technologies	-13.30

As expected, the list of top gainers and losers mirrored the broader sectoral trends, with stocks tied to domestic themes dominated the gainers list. Vodafone Idea also witnessed a sharp up-move after the government converted Rs. 36,950 crore of dues into equity, taking its stake to 49%. The move is expected to ease cash flow pressures and support future fund-raising efforts.

On the flip side, IT stocks—hit by global concerns—featured prominently among the week’s top losers.

Liquidity Conditions

Foreign investor sentiment, which had shown some signs of recovery in the preceding week, took a hit once again amid rising global uncertainties.

FIIs turned net sellers over the week, pulling out Rs. 13,700 crore from the markets.

On the other hand, domestic institutional investors continued to lend support, with net purchases of around Rs. 5,600 crore helping cushion the overall pressure.

India Equity - Institutional Funds Flow (in Rs. crore)

Date	FII	DII
April 01, 2025	-5,902	4,323
April 02, 2025	-1,539	2,809
April 03, 2025	-2,806	221
April 04, 2025	-3,484	-1,720
Total	-13,731	5,633

Tariff Tantrum: First and Second-Order Risks

Global equity markets took a hit following the US announcing reciprocal tariffs on major economies. The move sparked fears of trade disruptions and triggered broad-based selling. On the domestic front:

• India’s CAD/GDP stood at 1.1% in 3QFY25.
  

• Central government receipts in 11MFY25 were up 13.4% YoY.
  

• Capex growth moderated to 0.8% in the same period.
  

• The USD-INR appreciated 0.4% WoW to 85.24 levels, aided by RBI intervention.
  

• Brent crude rose to ~US$ 65.8/barrel.
  

• Gold hovered around Rs. 93,390 per 10g.
  

• 10-year G-Sec yields closed at 6.585%.

The April 2 tariff announcement may be a negotiation tactic rather than a final stance, but it’s unlikely to be the last. Reactions from trade partners and potential currency volatility remain key watchpoints.

While direct earnings impact on Nifty companies may be limited (given low index weight for affected export sectors), the second-order effects—like weaker US growth and reduced discretionary spending—could weigh on Indian exports.

Sectors like industrial exports, chemicals, textiles, fisheries, IT services, metals, auto components (~15–20% of the index) are more vulnerable.

On the flip side, domestic-facing sectors like FMCG or oil marketing companies may remain resilient, especially if crude remains soft.

The true impact may unfold over the next 1–2 quarters. For now, sentiment remains cautious, particularly for export-heavy pockets.

Technical Perspective

The market slipped below the crucial 23,500 mark during the week, triggering further selling. A long bearish candle on the weekly chart and a lower top on intraday charts indicate continued weakness.

Currently, the index is hovering near its 20- and 50-day SMAs. A move above 23,000/75,800 could trigger a pullback towards 23,250–23,325 / 76,500–76,800. But if it breaks below 22,800/75,200, it may slide to 22,700/74,900 and potentially to 22,500/74,400.

Bank Nifty’s 200-DMA at 51,000 is the key support. Holding above that keeps the uptrend intact with upside potential till 52,200–52,500. A breach could weaken the structure.

Strategy - Stay Light, Stay Patient

The week ahead brings several crucial triggers—globally, markets remain wary of potential tariff retaliation and pressure on the US Fed for rate cuts.

Domestically, the earnings season has kicked off, and the RBI’s monetary policy (Apr 7–9) will be a key event. With expectations building around a rate cut, any surprise could weigh further on sentiment.

Given this backdrop, we recommend holding onto existing positions without adding fresh exposure. It’s best to stay on the sidelines and let macro clarity and market stability return before stepping in again.

cautious