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Indian Economic Update
CPI inflation softened to 3.34% YoY in March, the lowest since August 2019, driven by lower food inflation. CPI inflation for Q4FY25 now stands at 3.7% and FY25 inflation stands at 4.6%.
WPI inflation softened to a 6-month low of 2.05% YoY in March, led by food inflation at 4.7% YoY while fuel and manufacturing inflation inched up. Manufactured products inflation inched up to a 27-month high of 3.1%.
Moody’s Ratings has slashed its projection for India’s real GDP growth in 2025 from 6.6% to a range of 5.5-6.5%, citing risks from new US tariffs.
The government has set up an inter-ministerial import surge monitoring group as high tariffs on certain countries like China and Vietnam may lead to a diversion of goods to India.
India's trade deficit widened to USD 21.54 billion, exports witnessed 0.7% growth at USD 47.91 billion and imports witnessed 11% YoY growth at USD 63.51 billion.
IMD has forecast above normal southwest monsoon in 2025, with rainfall expected to be 105% of the Long Period Average, with a model error of +/- 5%.
Global Update
- China’s exports grew sharply in excess of 12.4% in March as businesses kept front loading outbound shipments to avoid prohibitive US tariffs while imports continued to decline, falling by 4.3%, as domestic demand remained weak.
China’s economy expanded by a better-than-expected 5.4% in the first quarter, maintaining a strong momentum, even as US tariff threats prompted major investment banks to slash the country’s annual growth outlook.
The Federal Reserve Governor expects the impact of US tariffs on prices to be ‘transitory’ laying out 2 scenarios, larger and longer-lasting tariffs scenario or the smaller-tariffs scenario with the magnitude and period of impact differing.
The US has launched national security probes that could lead to tariffs on chips and pharmaceutical goods and a probe into potential new tariffs on all US critical minerals imports paving the way for a potential sharp escalation of the trade war.
Equity
The benchmark indices traded with a positive bias throughout the week, following the US President’s decision to put a 90-day pause on the tariffs. Although the Indian market traded positively, the Asian market traded mixed. Falling crude oil prices and strong FII outflows pose a challenge. However, some progress in terms of US-Japan trade negotiations limited any sharp downward move.
During the week, the Sensex gained 4.58% to close at 78553.20 while the NIFTY advanced 4.48% to close at 23851.65.
Debt
Indian G-Sec yields fell during the week as domestic CPI witnessed a 67-month low at 3.34% YoY which has raised expectations of more rate cuts by the RBI MPC given the accommodative stance. This week, participants are waiting for another OMO auction of INR 400 billion.
The 10-year benchmark G-Sec was trading at a yield of 6.37% on April 17, 2025 at 15:30 IST.
Oil
Oil prices traded mixed through the week with a positive bias. Initial fall in the prices, signals about the progress of US-China trade talks left markets on edge, fuelling concerns over the potential impact on global economic growth. However, a surge in the subsequent days followed new U.S. sanctions on Chinese importers of Iranian oil. These measures raised concerns about tighter global supply. Traders reacted to potential disruptions in oil flows. Geopolitical tensions continue to drive market volatility.
Brent was trading at USD 66.56 on April 17, 2025 at 15:30 IST.
Gold
Gold reached an all-time high after slightly falling initially. The rally was driven by escalating US-China trade tensions, which heightened investor anxiety and boosted demand for safe-haven assets. A weakening US Dollar further supported gold's upward momentum. Additionally, the absence of clear policy signals from Federal Reserve Chair Jerome Powell's speech left markets uncertain, prompting more investors to turn to gold.
Gold was trading at USD 3326.23 per ounce on April 17, 2025 at 15:30 IST.
Currency
The USD/INR pair traded with a mix through the week as Indian Rupee strengthened. The RBI’s 25bps Repo Rate cut and foreign portfolio inflows supported the INR. Lower CPI print bolstered hopes that RBI could consider more rate cuts. Meanwhile, investors are waiting for the India-US trade pact.
USD/INR was trading at 85.38 on April 17, 2025 at 15:30 IST.
April 17, 2025
Source: ICICI Bank Research, Private Banking Investment Strategy Team, Bloomberg and CRISIL.
Disclaimer
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.