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Indian Economic Update
The US imposed additional duty of 27% on India under the reciprocal tariffs. Essential and strategic items such as pharmaceuticals, semiconductors, lumber, copper, gold, oil, gas, coal and certain minerals that are not available in the US have been exempted from these tariffs
Moody’s positioned India’s economy as resilient amidst global uncertainties; projecting India’s real GDP to grow by 6.5% in FY26, highest amongst advanced, emerging G20 nations driven by tax measures, continued monetary easing and strong domestic economy
NHAI's capex reached an all-time high of over INR 2500 billion, exceeding its construction target for FY25 by 9% with 5,614 kms of national highways built
IMD forecasted intense summer heat in India and the prospect of a normal monsoon, with higher-than-usual temperatures and increased heatwave days in several regions
The RBI has appointed Dr. Poonam Gupta as its new Deputy Governor, ahead of the April MPC meeting
Global Update
The US President imposed the steepest American tariffs in a century applying at least 10% tariffs on all exporters to the US, with even higher duties on some 60 nations to counter large trade imbalances with the US. This includes some of the country’s biggest trading partners such as China, the European Union, Japan and Vietnam.
The Canadian Prime Minister announced a 25% tariff on vehicles imported from the US, mirroring the US President’s recent auto tariffs.
Fitch Ratings downgraded China’s sovereign rating on concerns over weakening finances and rising public debt, a day after the US imposed higher tariffs on the country.
Equity
- The benchmark indices opened lower and traded with a downward bias through most of the week mirroring the Global markets. The announcement of tariffs on the US imports triggered a sell-off in global markets. Amid expectations of countries responding with reciprocal tariffs, markets are expected to remain under pressure with investors looking towards the April MPC meeting and Q4 corporate results for further guidance.
- During the week, the Sensex lost 2.65% to close at 75364.81 while the NIFTY declined 2.60% to close at 22906.70.
Debt
Indian G-Sec yield traded mixed with volatility through the week but moved slightly upwards overall, tracking the increase in UST Yields. The UST yields moved lower post the announcements of the US reciprocal tariffs which raised concerns about the possibility of a global trade war. Government bond yields in India were also impacted by the start of the RBI’s OMO purchases in the week.
The 10Y benchmark G-Sec was trading at a yield of 6.47% on April 4, 2025 at 15:42 IST.
Oil
Oil prices traded mixed and remained volatile through the week. Early in the week, threat of additional tariffs from the US against major suppliers Russia & Iran created supply pressure pushing prices up. The announcement of reciprocal tariffs by the US increased demand concerns with expectation of a slowdown in the global growth and demand. This was further compounded by the OPEC+ decision to phase out production cuts early, pushing prices below the USD 70 mark.
Brent was trading at USD 67.25 on April 4, 2025 at 15:42 IST.
Gold
Gold prices opened slightly positive but traded mixed through the week, remaining over the USD 3100 mark. Safe-haven investment demand driven by economic uncertainty resulting from the reciprocal tariff announcements by the US and ongoing geopolitical tensions supported gold prices. Expectation of a Fed rate cut, lowering UST yields and the slump in the U.S. Dollar further supported the prices.
Gold was trading at USD 3093.52 Per Ounce on April 4, 2025 at 15:42 IST.
Currency
The USD/INR pair traded with a slight negative through the week with INR strengthening. The markets were cautious ahead of the reciprocal tariff announcement but the decline in the Dollar index following the announcement strengthened the INR. Fall in crude oil prices also supported INR as investors’ focus shifted to the US non-farm payroll for fresh cues about economic conditions. The RBI continues to intervene and stabilise the currency by limiting volatility in the Indian Rupee.
USD/INR was trading at 85.24 on April 4, 2025 at 15:42 IST.
April 4, 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.
