Markets This Week: Rupee Bounces Back, US GDP Contracts, Oil at 4-Year Low | Weekly Financial Market Recap (Apr 28 – May 02)

News Announcement

Impact Analysis

India IIP growth for March improved slightly to 3.0%, with FY25 IIP at 4.0%

·       While mining IIP fell in March, manufacturing was just 20 bps higher, but electricity provided the real boost to IIP.

·       While positive growth in IIP came from the domestic oriented sectors, pressure was again visible in the export plays.

In a surprising shift, the US Q1 GDP first advance estimated contracted -0.3%

·       This was triggered by a spike in imports of goods and a slowdown in government spending, especially in defence.

·       Due to the uncertain macro environment, personal financial consumption plummeted, leading to sharply lower growth.

The US PCE inflation for March 2025 fell by 40 bps from 2.7% to 2.3%

·       The fall was led by a sharp fall in core inflation, which fell by 40 bps from 3.0% to 2.6%, as oil prices contracted further.

·       There was a 50-bps spike in food inflation in March, but it is the services inflation that is proving to be the sore point.

CME Fedwatch expects 100 bps cut in 2025 and 25 bps more in 2026

·       The broad estimates have not changed, although there has been some back-ending with rate cuts pushed to second half.

·       Weak GDP and low PCE inflation provide the US Fed the necessary justification to be more aggressive on rate cuts.

FPIs closed the month of April 2025 with net equity inflows of $510 million

·       The first fortnight saw FPI net selling of $(3.96) billion while the second fortnight saw FPI net buying of $4.57 billion.

·       However, FPIs have turned net sellers in Indian debt paper as the yield spreads with US benchmark yields has narrowed.

US dollar index (DXY) closed at 99.53; below the 100 marks for 3 weeks in a row

·       The economic uncertainty and the contraction in GDP have put further pressure on the dollar, leading the index lower.

·       The sharp fall in the dollar index has helped the Indian rupee recover from a low of ₹87.5/$ to current level of ₹84.5/$.

Brent Crude oil prices fell to a 4-year low of $60-$61/bbl, a boon for India

·       The price of Brent has fallen after Saudi Arabia decided to shift from supply cuts to increasing supply even at lower price.

·       Even on the demand side, the trade war and the latest GDP contraction reported by the US economy, dented oil demand.

S&P Ratings has cut India’s FY26 GDP growth estimate by 20 bps to 6.3%

·       S&P has cited a combination of global economic shocks and the tariff uncertainty as key reasons for this downgrade.

·       In addition, it also expects the lag effect on FY27, reducing GDP estimate by 30 bps to 6.5%, with more downside risks.

OYO has again decided to put off its IPO to 2026 after Softbank cut valuations

·       Earlier, OYO had filed for its IPO in 2021 and 2023 and this is third abortive IPO attempt for OYO after drop in valuations.

·       Apparently, the decision to delay the IPO is in exchange for a promised extension of the loan arranged by Softbank.

Equity flows are expected to turn robust in April, after 3 bad months

·       This is the inference based on aggressive mutual fund buying in the secondary markets, plus steady inflows from SIPs.

·       Two consecutive months of positive returns by the Nifty has already given confidence to fund managers to re-enter.

Supreme Court rejects JSW takeover plan for Bhushan Steel & Power Ltd

·       Supreme Court called the resolution plan a violation of the IBC code and called for liquidation of the company.

·       JSW is yet to respond to the order and would be deciding on next course of action after consulting its legal experts.

SEBI relaxes norms for brokers to expand into GIFT City, Gujarat

·       SEBI has done away with the NOC requirement and allowed brokers to start IFSC operations without prior approval.

·       However, the unit at IFSC would have to be a strategic business unit (SBU) with separate identifiable net worth.

Start-up funding April 2025 at $745 million marked a one-year low

·       This is a sharp fall from the levels in January 2025, when the start-up funding stood at a robust level of $1.76 billion.

·       While Spinny was the largest funding deal in April; Bengaluru and Delhi NCR accounted jointly for 70% of the fund raising.

Godrej Properties eyes bookings of ₹32,500 crore in fiscal FY26

·       This is about 10% higher than FY25, when it sold 15,302 residential units worth ₹29,444 crore; 10% above projections.

·       In FY26, GPL is looking at property launches worth ₹40,000 crore across Mumbai, Delhi-NCR, Pune, and Bengaluru regions.

April 2025 jobs data showed the US rate of unemployment steady at 4.2%

·       Non-farm payrolls in April 2025 increased by 1,77,000, which is marginally lower than the addition in March 2025.

·       The US economy needs to keep adding at least 1,00,000 jobs a month to sustain growth, and tariffs could be the challenge.

The response to Ather Energy IPO was relatively tepid at just 1.43 times

·       There were great expectations, being the first IPO in 75 days and also due to 45% IPO size absorbed by anchor investors.

·       QIB and retail portion got subscribed 1.70 times and 1.78 times respectively, while HNI portion got just 66% subscription.

Zoho, the company floated by Sridhar Vembu, has shelved chip making plans

·       Zoho was supposed to invest $700 million in the chip facility, but called it off as it could not get the right technology partner.

·       Earlier, even Adani had shelved its chips plan for the same reason, and that is not good news for the government plans.

Infosys continued to cut its trainee staff, having reduced 800 since Feb-25

·       According to Infosys, these are routine layoffs of trainees who fail to pass the examinations after 3 repeated attempts.

·       However, this is indicative of a larger trend where IT companies cannot afford a large bench as use of AI increases.

India placed a $7.5 billion order for 26 Naval variant jets from Rafale of France

·       The overall deal includes the supply of fighter aircraft starting 5 years from now; ancillary equipment and weapon systems.

·       The order was positive for Indian defence stocks, but assumes added significance in the light of the border skirmishes.

Diplomatic ties between Pakistan and India have worsened after Pahalgam

·       While India has cut all diplomatic ties with Pakistan, it has also decided to suspend the ongoing Indus Water treaty.

·       On its side, Pakistan has also severed all diplomatic ties with India and also blocked Pakistani airspace to Indian aircraft.

Ø  BFSI funds have led the rally in mutual funds in tandem with Nifty bounce

·       As the Nifty gained 10% from the lows, the BFSI funds have outperformed at 14.5%, largely due to domestic base.

·       Other categories that have done well include small cap, mid-cap, consumption as well as various business cycle funds.