Indian Developments

 

 

Last week, the Indian stock markets witnessed a broad-based decline after three weeks of consecutive gains. Benchmark indices — Nifty 50 and Sensex — declined by 1.39% and 1.30%, respectively. Mid- and small-cap indices also ended in the red, with Nifty Midcap 150 down 0.72% and Nifty Small Cap 250 lower by 1.78%.

 

The decline was primarily attributed to rising geopolitical tensions between India and Pakistan.

 

Losses were partly offset by a significant drop in global crude oil prices following OPEC+’s decision to raise output, easing inflationary concerns. Furthermore, sustained foreign institutional investor (FII) inflows helped limit the downside.

 

The US Fed’s limited commentary on tariff-driven inflation risks added global uncertainty, compounding the cautious sentiment.

 

Sectors like Pharma and PSU Banks were impacted by concerns over US tariffs on imported pharmaceuticals and general geopolitical risk-off sentiment.

 

Global Developments

 

Global equity markets remained volatile, influenced by:

 

• Ongoing US-China trade negotiations, Mixed US economic data (job growth, GDP), Strong corporate earnings from major tech companies

 

Positive economic data and earnings supported sentiment in Asia, while policy guidance helped Western markets remain stable.

 

Macroeconomic Indicators

 

 

• India Services PMI: Rose to 58.7 in Apr 2025 (vs 58.5 in Mar), led by strong demand and a sharp rise in new business.

 

• Composite PMI: Improved to 59.7 (vs 59.5 in Mar).

 

Additional macro highlights:

 

• RBI reported gold reserves now constitute 11.7% of total FX reserves, totalling 879.59 metric tonnes, up sharply in 4 years.

 

• India’s exports to the US hit a record $11.2 billion in Mar 2025 — a 50% surge over the 12-month average, pushing total bilateral trade to $15 billion.

 

 

Domestic Debt Market

 

Bond markets witnessed upward pressure on yields due to geopolitical risk:

 

• The yield on the 10-year benchmark (6.79% GS 2034) rose by 2 bps to 6.38%.

 

• Panic selling was contained by RBI’s open market operations (OMO).

 

 

Commodity Market

 

 

• Comex Gold: Gained over 2% due to a weaker dollar and safe-haven buying amid rising US-China tariff tension. President Trump’s remark supporting an 80% tariff on China added further uncertainty.

 

• Comex Silver: Rose over 2%, supported by buying interest and US dollar weakness. Mixed data from China and the US plus the Fed’s cautious tone contributed to support.

 

 

• Nymex Crude: Jumped over 4%, rebounding past $60/barrel. The rally was driven by:

 

• • Tensions in India-Pakistan, Positive signals on US-China trade talks, Strong Chinese export data and crude imports (+7.5% YoY)
  • New US-UK trade agreement, Tightened US sanctions on Iran

 

Best Regards
 

Alpha Research

 

Disclaimer:  The perspectives provided reflect our expectations of the economy, market, and investments, which may or may not materialize. Investors are encouraged to conduct their own due diligence before investing.