<p>This week, Indian markets are expected to remain volatile on the back of concerns over the impact of the US reciprocal tariffs and potential announcements of further sector specific tariffs during the week. Also, focus will be on RBI’s monetary policy outcome on April 9, where the market is expecting another 25 bps rate cut, and the Q4FY25 earnings season kicking off with TCS results on April 10. Investors will also watch out for March CPI data from US and India to be released this week.</p>.<p>We believe that though the 26% tariffs on India are higher than expected, it is relatively lower compared to that levied on its neighbours. This could improve India’s potential export competitiveness. Overall, we expect that the impact of reciprocal tariffs on India will be limited on a national basis as India’s exports in the six most vulnerable sectors amount to only 1.1% of India’s GDP. There is a possibility that the impact could further be reduced as India is in the process of negotiating a bilateral agreement with the US. </p>.<p>Last week, benchmark indices Sensex and Nifty 50 declined by 2.6% each. Nifty ended at 22,904 level, breaking below the 23k mark following a global sell-off sparked by US President Trump’s tariff announcements and renewed concerns over economic slowdown. The broader market witnessed selling pressure, with Nifty Midcap100 and Nifty Smallcap100 falling by 2% and 2.6% respectively. Amongst sectors, IT was the worst performer, plunging by 9% on concerns over reduced IT spending in the US. Nifty Metal slumped 7.5% due to potential disruption of business activities amid global trade war. Auto and pharma indices followed with loss of 3% each.</p>.<p>FMCG and banking sectors were flat to positive, showing resilience amid negative global market cues.</p>.<p>In the IT sector, the discretionary spending recovery that was expected to pick up in H1FY25 has been stuck in the second gear; and clients are likely to be in wait-and-watch mode as they take stock of the potential US economic slowdown amidst tariff war, a slower Fed rate cut cycle and other macro-economic risks. The net result of this will be a stop-start recovery in discretionary spending, pegging FY26E revenue growth for most large-caps in the range of 2-5% in constant currency (CC). All eyes now will be on FY26 guidance; we expect Infosys to guide for 2.5%-5% CC growth for FY26; and expect HCL Tech’s top end to be in a similar range.</p>.Subdued Q4 earnings for IT firms expected as uncertainties persist.<p>As per monthly auto sales data released last week, OEM volumes for passenger vehicles (PVs), two- wheelers and commercial vehicles (CVs) were largely in line with expectations in March 2025, while tractor volumes outperformed. Tractor demand was a bright spot as volumes surged about 29% YoY, supported by strong farm sentiment, a good rabi crop outlook, and festive demand. We expect tractor demand to remain resilient in the near term.</p>.<p>In the pre-quarterly review for banks, credit growth outlook remains modest as the systemic credit growth slowed to about 11% in 4QFY25 from 16.5% a year ago. This is on account of slower demand in certain secured products, stress in the unsecured segment, and a high credit-deposit ratio across the system. We expect credit growth to remain tepid at 12% in FY26E. With inflation being lower, we foresee two-three rounds of rate cuts in FY26, thus impacting yields especially in 1HFY26.</p>.<p>In case of NBFCs, notwithstanding seasonality, demand trends and loan growth are expected to remain flat during the quarter. This is due to calibrated growth in unsecured retail, muted disbursements in microfinance and low mortgage volumes. We remain underweight in microfinance and would closely monitor any impact on collections from the implementation of MFIN (Micro Finance Institutions’ Network) guardrails 2.0 from this month. </p>.<p>Brent crude fell below $65 per barrel on Friday last week, marking its lowest level since August, 2022. We expect shares of OMCs (oil marketing companies), aviation and paint companies to gain as low crude prices would reduce input costs and improve profit margins for these industries.</p>.<p>(The author is Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd)</p>
<p>This week, Indian markets are expected to remain volatile on the back of concerns over the impact of the US reciprocal tariffs and potential announcements of further sector specific tariffs during the week. Also, focus will be on RBI’s monetary policy outcome on April 9, where the market is expecting another 25 bps rate cut, and the Q4FY25 earnings season kicking off with TCS results on April 10. Investors will also watch out for March CPI data from US and India to be released this week.</p>.<p>We believe that though the 26% tariffs on India are higher than expected, it is relatively lower compared to that levied on its neighbours. This could improve India’s potential export competitiveness. Overall, we expect that the impact of reciprocal tariffs on India will be limited on a national basis as India’s exports in the six most vulnerable sectors amount to only 1.1% of India’s GDP. There is a possibility that the impact could further be reduced as India is in the process of negotiating a bilateral agreement with the US. </p>.<p>Last week, benchmark indices Sensex and Nifty 50 declined by 2.6% each. Nifty ended at 22,904 level, breaking below the 23k mark following a global sell-off sparked by US President Trump’s tariff announcements and renewed concerns over economic slowdown. The broader market witnessed selling pressure, with Nifty Midcap100 and Nifty Smallcap100 falling by 2% and 2.6% respectively. Amongst sectors, IT was the worst performer, plunging by 9% on concerns over reduced IT spending in the US. Nifty Metal slumped 7.5% due to potential disruption of business activities amid global trade war. Auto and pharma indices followed with loss of 3% each.</p>.<p>FMCG and banking sectors were flat to positive, showing resilience amid negative global market cues.</p>.<p>In the IT sector, the discretionary spending recovery that was expected to pick up in H1FY25 has been stuck in the second gear; and clients are likely to be in wait-and-watch mode as they take stock of the potential US economic slowdown amidst tariff war, a slower Fed rate cut cycle and other macro-economic risks. The net result of this will be a stop-start recovery in discretionary spending, pegging FY26E revenue growth for most large-caps in the range of 2-5% in constant currency (CC). All eyes now will be on FY26 guidance; we expect Infosys to guide for 2.5%-5% CC growth for FY26; and expect HCL Tech’s top end to be in a similar range.</p>.Subdued Q4 earnings for IT firms expected as uncertainties persist.<p>As per monthly auto sales data released last week, OEM volumes for passenger vehicles (PVs), two- wheelers and commercial vehicles (CVs) were largely in line with expectations in March 2025, while tractor volumes outperformed. Tractor demand was a bright spot as volumes surged about 29% YoY, supported by strong farm sentiment, a good rabi crop outlook, and festive demand. We expect tractor demand to remain resilient in the near term.</p>.<p>In the pre-quarterly review for banks, credit growth outlook remains modest as the systemic credit growth slowed to about 11% in 4QFY25 from 16.5% a year ago. This is on account of slower demand in certain secured products, stress in the unsecured segment, and a high credit-deposit ratio across the system. We expect credit growth to remain tepid at 12% in FY26E. With inflation being lower, we foresee two-three rounds of rate cuts in FY26, thus impacting yields especially in 1HFY26.</p>.<p>In case of NBFCs, notwithstanding seasonality, demand trends and loan growth are expected to remain flat during the quarter. This is due to calibrated growth in unsecured retail, muted disbursements in microfinance and low mortgage volumes. We remain underweight in microfinance and would closely monitor any impact on collections from the implementation of MFIN (Micro Finance Institutions’ Network) guardrails 2.0 from this month. </p>.<p>Brent crude fell below $65 per barrel on Friday last week, marking its lowest level since August, 2022. We expect shares of OMCs (oil marketing companies), aviation and paint companies to gain as low crude prices would reduce input costs and improve profit margins for these industries.</p>.<p>(The author is Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd)</p>