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Indian Economic Update
India’s merchandise trade deficit slumped to USD 14.05 billion in February, the lowest level since August 2021 as imports of petroleum crude and gold fell sharply and the uncertainty over tariffs hampered global trade
India's WPI inflation increased to 2.38% YoY in February much higher than 0.2% YoY a year ago driven by the higher manufactured products inflation at 2.9% YoY
The RBI made net sales of foreign currency worth USD 11.1 billion in January 2025 compared to net sales of USD 15.2 billion in the preceding month. The apex bank bought foreign currency worth USD 49.1 billion and sold worth USD 60.3 billion
The RBI bulletin for March 2025 noted that India’s economy remains resilient, driven by robust domestic demand, steady investments, infrastructure development and increased government spending. It further added that India’s inward remittances have more than doubled during 2010-11 to 2023-24 and have been a stable source of external financing during this period
The government assured exporters that it will ensure that they aren’t put at a disadvantage in their dealings with the US as the reciprocal tariffs become effective from April 2 but it added that the country cannot be ‘overprotective' about its markets
The EPFO added 1.8 million new subscribers on a net basis in January 2025 with 823k new subscribers joining and 537k exiting the scheme
Global Update
The OECD has projected global GDP growth to moderate at 3.1% and 3.0% for 2025 and 2026 (vs 3.2% in 2024) respectively citing higher trade barriers in several G20 economies, increased geopolitical and policy uncertainty impacting investment and household spending. Downgrades have been made to the US and Indian economy from 2.4% to 2.2% and 6.9% to 6.4% respectively
The FOMC maintained status quo on the policy rates in its March policy meeting. The Fed also slashed its US growth forecast and lifted its inflation outlook, underscoring concerns that the tariff wars will impact the US economy
The Bank of Japan held interest rates as the rising risk of a global trade war and potential downturn in the US weighed on Japan’s hope for a sustained economic revival
The PBOC kept its key lending rates unchanged as China juggles propping up growth and stabilising its currency amid mounting trade frictions
Equity
- The benchmark indices opened positive and traded upwards through the week mirroring the global markets. Investors took cues from the outcome of the monetary policy meetings of the Bank of Japan and the US Federal Reserve. Favourable macroeconomic indicators and high chances of a rate cut attracted inflows into the market.
- During the week, the Sensex gained 4.14% to close at 76905.51 while the NIFTY advanced 4.26% to close at 23350.40
Debt
- Indian G-Sec yield traded flat through most of the week but moved upwards overall tracking the increase in UST yields. Despite systemic liquidity being in a deficit, bond prices improved due to market expectations of a rate cut in the upcoming MPC meeting.
- The 10Y benchmark G-Sec was trading at a yield 6.63% of on March 21, 2025 at 16:21 IST
Oil
- Oil prices traded positive through the week. The rise was driven by increasing tensions in the Middle East after US military strikes on Yemen, China’s fresh measures to boost consumption and low reserve levels in the US. Additionally, OPEC+ announced a plan to cut output, raising expectations of a tighter supply further supporting prices.
- Brent was trading at USD 71.66 on March 21, 2025 at 16:21 IST
Gold
- Gold prices traded positive through the week surpassing the USD 3,000 mark early in the week. Safe-haven investment demand driven by economic uncertainty resulting from the US tariff war, rising tensions in the Middle East and the slump in the US Dollar supported the gold prices.
- Gold was trading at USD 3033.15 Per Ounce on March 21, 2025 at 16:21 IST
Currency
- The USD/INR pair traded with a negative bias through the week as the Indian Rupee strengthened to a 2-month high. The strengthening was driven by the lowering in the Dollar index as FOMC maintained a status quo. The RBI continues to intervene and stabilise the currency by limiting the fall in the Indian Rupee.
- USD/INR was trading at 85.97 on March 21, 2025 at 16:21 IST
March 21, 2025
Source: ICICI Bank Research, Private Banking Investment Strategy Team, Bloomberg and CRISIL.
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The information set out herein has been prepared by ICICI Bank in good faith and from sources deemed reliable. ICICI Bank does not provide any assurance as regards the accuracy of such information. ICICI Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any direct or indirect loss / claim/ damage caused to any person, arising out of or in relation to the use of information communicated herein.
