Investment Ideas Note – April 2025 – Wallet Wealth

Market Outlook

As FY2025 ends, it’s remarkable how swiftly time has passed. The Indian equity markets witnessed significant foreign portfolio investor (FPI) outflows in the early part of the year, with February alone seeing sales worth ₹34,574 crore. Combined with January’s figures, FPIs offloaded a massive ₹1.12 lakh crore in just the first two months of 2025.

This selling was driven by a mix of rising global tensions, high market valuations, and softer corporate earnings growth.

Equity Market Performance – March 2025

Despite the early-year turbulence, March brought some much-needed relief across major indices:

Index	March 3, 2025	March 28, 2025	Gain/Loss
BSE Sensex	73,085.94	77,414.91	+5.9%
BSE Midcap	38,690.02	41,531.12	+7.3%
BSE Small Cap	42,779.71	46,638.13	+9.0%
Nifty 50	—	—	+6.3%
Nifty Midcap 150	—	—	+7.5%
Nifty Bank	—	—	+7.2%

The market rebounded mid-March, with the Nifty 50 trading 0.49% higher over previous sessions—reflecting positive sentiment.

Market Innovations and Economic Outlook

In a significant development, NSE’s subsidiary launched the Nifty India Internet & ECommerce Index—a thematic index tracking companies that predominantly operate through online platforms. This points toward the expanding role of digital commerce in India’s economy, despite its inherent volatility.

On a macro level, the International Monetary Fund (IMF) projects India’s GDP growth at 6.5% for FY2025-26, supported by strong private investments, macroeconomic stability, and structural reforms.

Global Trade Pressures – Impact of U.S. Tariffs

Recent tariff hikes under the Trump administration are expected to increase consumer prices in several sectors. The impact will vary by industry depending on supply chain dependencies, market competition, and product necessity.

India has been significantly affected, with U.S. tariffs now totaling 36% on Indian exports— 10% across all countries and an additional 26% on select nations including India. This development necessitates strategic market diversification for Indian exporters and active diplomatic efforts to mitigate risks.

Mutual Funds and FII Activity – March 2025

Despite earlier sell-offs, FPI activity turned positive in March:

Category	FII (₹ Cr)	MF (₹ Cr)
Equity	+8,053.44	+5,925.67
Debt	+9,109.97	–75,504.15
Total	+17,163.41	–69,578.5

Focused equity funds stood out as an exception amid broader mutual fund corrections, witnessing a 64.4% increase in inflows, signaling continued investor optimism and strategic buying during market dips.

Looking Ahead – Navigating the Path Forward

The recent market correction is largely cyclical, driven by slowing corporate earnings and elevated valuations. That said, we believe this to be a temporary pause in what continues to be a multi-year growth cycle for the Indian economy.

Key government measures—including repo rate cuts, liquidity easing, and income tax relief announced in the Union Budget—are expected to support long-term growth. While large-cap valuations are now more reasonable, mid-cap and small-cap segments remain expensive, warranting careful portfolio construction.

Investor Perspective – Embrace Diversification

The recent downturn serves as a timely reminder of the importance of diversification. A balanced portfolio across sectors, asset classes, and market capitalizations can cushion against short-term volatility. India's long-term fundamentals remain strong, and current market phases may provide attractive entry points for patient investors.

In essence, while the Indian equity market faces short-term turbulence due to external pressures like global trade frictions, the medium to long-term outlook remains constructive, underpinned by solid domestic drivers, proactive policy initiatives, and resilient investor sentiment.

What’s in store for us next?

GDP Growth Outlook

The International Monetary Fund (IMF) has projected India’s GDP growth to remain stable at 6.5% for both 2025 and 2026, despite prevailing global uncertainties. This projection underscores the resilience of the Indian economy amid external challenges.

Additionally, the Reserve Bank of India (RBI) is expected to adopt further rate cuts to bolster domestic growth momentum and maintain liquidity in the financial system. We are of the opine that the RBI may cut 25 basis point rate cut in the upcoming policy meeting to support economic growth amid trade challenges.

Indian Equity Market Recovery

Following a notable correction in early 2025, the Indian equity market is positioned for a gradual recovery through the remainder of the year. While external pressures such as global trade tensions have induced short-term volatility, strong domestic fundamentals and accommodative policy measures are likely to support a steady rebound.

Global Trade Challenges

Several nations, including India, continue to face the impact of the stringent tariff regime imposed by the U.S. These trade barriers pose immediate challenges for exporters; however, they also present an opportunity for Indian businesses to explore alternate global markets, encouraging strategic market diversification.

Rural Consumption Trends

The outlook for rural consumption remains cautiously optimistic. A favorable monsoon, supportive government policies, and strong agricultural production are expected to drive rural demand. However, challenges such as stagnant rural wage growth and a potential slowdown in urban consumption may temper the pace of growth in the rural economy.

Equity

The market cap over GDP ratio is currently at 113. This shows that the market is fair valued. The zone indicates a good entry point and little cautious while investing for a short term.

The investor should focus on their financial goals and realign the portfolio at this juncture.

The investors can focus investing on large cap & hybrid funds and investors who would like to take a little risk can enter banking & financial funds at this juncture.

It is advisable not to invest lumpsum and invest into equity mutual funds over a 20–24-week period. As the valuations of small cap is on the higher side and hence one can wait and watch before investing in small cap. We are of the opine that the large & mid cap funds would outperform the small cap this year.

Debt

The 10-year G-Sec is trading at 6.59% and the 5 Year G-Sec is trading at 6.43%. One can start looking at high quality corporate bonds and banking & PSU bond with the maturity of 3 years could possibly generate a decent double-digit return.

The best time to enter duration management funds would be faring better during this point in time. If one would like to look at parking money for a period of less than 1 year can look at investing in ultrashort/money market funds.

We strongly recommend the investors to avoid credit risk funds now.

S.Sridharan, Founder, https://www.walletwealth.co.in/

If you need any advice on investments, do call us at 9940116967.

Team Wallet Wealth,

AMFI Registered Mutual Fund Distributor

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Chennai – 600 061

Ph: 044-48612114

Disclaimer: The above information and views are personal and confidential. The information herein is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness, or correctness for any particular purpose. Opinions expressed are of our personal and subject to change without notice.