Economy

Global consumer giants have praised India’s market performance. Top brands like Coca-Cola, Harley-Davidson, and Philip Morris International have highlighted India as a key growth driver, especially when other markets are experiencing slower demand.

This enthusiasm isn’t limited to a single sector; discretionary and mass-market brands are optimistic about India’s potential and plan to make significant investments to fuel further expansion in 2025.

During their recent earnings calls, companies such as Philip Morris International and Yum! During their recent earnings calls, brands Carlsberg Group, Pernod Ricard, Apple, Beiersdorf, and Skechers highlighted India as a key growth market for the December quarter and fiscal year 2024.

Why India Stands Out in Global Consumption
Companies With More Investment This Year.	Coca-Cola, Carlsberg
High Sales Growth in Oct-Dec 24	Pernod Ricard, Skechers, Apple, AO Smith
India Driving Asia-Pacific Business	Harley-Davidson, Philip Moris, Yum! Brands
GDP Growth Forecast	Forecast at 6.7% in FY26 from 6.4% in FY25
Income Tax Relief	Revival in Household Consumption due to Income Tax Relief

Economic Outlook: Growth Projections and Fiscal Measures

The Reserve Bank of India (RBI) has projected GDP growth of 6.7% for the 2025-26 fiscal year, indicating strong momentum ahead. For the current fiscal year (2024-25), India’s economy is expected to expand at 6.4%, reinforcing positive growth expectations.

The FY26 budget’s income tax rationalization is expected to stimulate household spending, boosting overall consumption and economic activity. The government is optimistic about the economic rebound and has assured that India’s growth slowdown is temporary. It has also emphasized that the economy is set for a “speedy rebound.” 

Global Brands See Strong Growth in India

Coca-Cola’s Sweet Success

Coca-Cola has seen remarkable growth in India, with its mango drink, Maaza, becoming a billion-dollar brand. The company has emphasized India’s vibrancy and mentioned that a significant portion of its 2025 capital investment is earmarked for India and Africa.

Harley-Davidson’s Revved-Up Sales

Harley-Davidson’s full-year sales in the Asia-Pacific region declined by 18% year-on-year in 2024, primarily due to weak demand in Japan and China. However, sales in India, Australia, and New Zealand showed modest growth despite the regional downturn. economictimes.indiatimes.com

Tobacco and Spirits: A Growing Appetite

Philip Morris International, known for its Marlboro brand, identified India as a significant contributor to its growth in low and middle-income countries. The company reported a 0.6% growth in cigarette shipments in 2024. Growth was driven by markets where smoke-free products are prohibited, including Turkey, Brazil, and India. Excluding these markets, the company saw a low single-digit decline in overall shipments.

Carlsberg acknowledged India’s volatility but confirmed increased investments in 2025. Plans include expanding production capacity for the 2026 season and boosting sales investments.

Similarly, Pernod Ricard, the Chivas Regal and Absolut vodka maker, has been focusing on the Indian market, recognizing its potential amidst a global slowdown. The company stated that India is now the company’s second-largest market, and the liquor giant saw 6% growth between June and December 24.

Footwear and Fashion: Stepping Up

Skechers, an American footwear brand, reported a 25% increase in sales in India for the December quarter. The company plans to open more stores nationwide to capitalize on the growing demand for performance and lifestyle footwear.

Fast Food Giants Expanding

Yum! Brands, which operates KFC and Pizza Hut, has been expanding its footprint in India. The company sees India as a key market for growth, contributing significantly to its international sales.

High Growth in Key Sectors

Apple, Skechers, and AO Smith reported strong growth in the October-December quarter. Apple recorded its highest-ever quarterly sales, with the iPhone becoming the top-selling smartphone.

Factors Fueling the Growth

Several elements contribute to India’s appeal to these global giants:

• Rising Disposable Incomes: As more Indians move into the middle and upper-middle-income brackets, there’s an increased appetite for premium and discretionary products.
• Urbanization: The rapid growth of cities has led to more consumers with varied tastes eager to try new products and experiences.
• Youth Demographic: A significant portion of the population is young, so there’s a natural inclination toward global brands, fashion, and technology.
• Digital Penetration: The widespread use of smartphones and the internet has made it easier for consumers to access global brands, increasing awareness and demand.

Challenges on the Horizon

While the outlook is optimistic, companies must navigate certain challenges:

• Infrastructure Variability: Ensuring product availability across diverse geographies can be complex due to varying infrastructure quality.
• Regulatory Environment: Staying compliant with India’s evolving regulatory landscape requires continuous attention.
• Local Competition: Domestic brands are also upping their game, offering quality products at competitive prices, which means global brands must continually innovate to stay ahead.

Looking Ahead

The enthusiasm from global consumer companies underscores India’s growing importance in the worldwide market. With strategic investments and a keen understanding of local preferences, these companies are well-positioned to ride the wave of India’s consumption boom. As 2025 unfolds, seeing how these brands adapt and thrive in this dynamic landscape will be interesting.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

India and France have had a robust partnership since establishing diplomatic relations in 1947. Over the decades, this relationship has evolved into a strategic alliance encompassing defense, space, nuclear energy, and cultural exchanges. 

Economic cooperation has become a cornerstone of this partnership in recent years, with significant bilateral trade and investment flows.

Current Economic Ties: Trade and Investment

As of 2023, bilateral trade between India and France reached approximately $20 billion, primarily focusing on the defense and aerospace sectors. This marks an increase from previous years, indicating a strengthening economic relationship. 

Regarding foreign direct investment (FDI), France is one of the largest investors in India. In the fiscal year 2022-23, France’s FDI inflow into India was $659.77 million, contributing to a cumulative FDI stock of $10.76 billion from April 2000 to September 2023. Over 750 French companies operate in India, employing more than 450,000 people. mea.gov.in

PM Modi’s Visit: Key Economic Highlights

Prime Minister Narendra Modi’s recent visit to France, particularly his engagements in Marseille, has significant economic implications.

1. Defense Collaboration:

France’s advanced discussions to procure India’s multi-barrel rocket launcher system, Pinaka, is a notable development. This would mark the first instance of a major Western nation purchasing an Indian-made defense system, signaling a shift in defense trade dynamics and showcasing India’s growing defense manufacturing capabilities. reuters.com

2. Nuclear Energy Partnership:

India and France have signed a declaration to establish a partnership to develop advanced and small modular nuclear reactors. This collaboration will leverage both nations’ expertise in nuclear technology, potentially leading to advancements in sustainable energy solutions and opening avenues for economic growth in the energy sector. reuters.com

3. Inauguration of the Indian Consulate in Marseille:

Establishing a new Indian consulate in Marseille is poised to enhance economic ties by facilitating business interactions, supporting Indian enterprises in France, and promoting bilateral trade. Marseille’s strategic location as a Mediterranean port city offers significant opportunities for trade expansion and economic collaboration.

Economic Impact: What to Expect

Economic Impact: How PM Modi’s Visit Strengthens India-France Ties

PM Modi’s engagements in Marseille and Paris focused on defense, energy, technology, and infrastructure. The agreements signed during his visit are expected to have a multi-sectoral impact, enhancing India’s long-term economic trajectory.

1. Boost to Bilateral Trade and Market Access

Current trade volume: India-France trade reached $20 billion in 2023, a 40% increase from 2020. The latest agreements will likely push trade closer to the $25 billion mark by 2025.

Diversification of trade: While defense and aerospace dominate, India is set to increase exports of electronics, pharmaceuticals, and renewable energy components to France, reducing the reliance on China.

EU Trade Agreement Synergies: India is negotiating a Free Trade Agreement (FTA) with the European Union. As a key EU member, France could help fast-track negotiations, opening a market of $17 trillion GDP for Indian exporters.

➡ Impact: Higher export revenues for Indian businesses and expanded market access for French industries in India.

2. Stronger Defense and Aerospace Ties

France’s defense contracts in India: France is India’s second-largest defense supplier (after Russia), accounting for $7.65 billion in contracts since 2018.

New collaboration: Pinaka Rocket System: France is in advanced discussions to buy India’s indigenous Pinaka multi-barrel rocket launcher, potentially in a $1 billion deal. This marks a shift in India’s role from defense buyer to exporter.

Rafale-M Jet Procurement: India is finalizing the acquisition of 26 Rafale-M jets for its aircraft carriers, further strengthening Indo-French defense ties.

➡ Impact: Higher defense manufacturing jobs in India and increased foreign exchange reserves through defense exports.

3. French Investments in Indian Infrastructure and Tech

FDI Growth: Since 2000, France has invested $10.76 billion in India, making it the 11th largest FDI source. However, only 1.6% of India’s total FDI inflows indicate room for growth.

Upcoming French Investments:

• Airbus-Tata aircraft manufacturing in India
• Expansion of SNCF (French rail operator) in India’s urban mobility projects
• Greater investment in renewable energy and hydrogen projects

➡ Impact: Infrastructure modernization and new jobs in aviation, rail, and green energy sectors.

4. Energy Security Through Nuclear Cooperation

India-France Nuclear Partnership: France has committed to investing in Small Modular Reactors (SMRs) and advanced nuclear technology in India.

Jaitapur Nuclear Power Plant: France is working with India to build the world’s largest nuclear power plant, with a capacity of 9,900 MW, in Jaitapur, Maharashtra. Once operational, it will supply 7% of India’s electricity needs.

Strategic Shift: India aims to increase nuclear energy’s share of its total electricity production from 3% to 9% by 2047, reducing its dependency on fossil fuels.

➡ Impact: Energy security, reduced carbon emissions, and lower reliance on oil imports.

5. Tech and AI Collaboration: India’s Strategic Move

AI and Digital Transformation: France is positioning itself as a key partner in India’s AI and semiconductor expansion. Agreements signed include:

• Collaboration on AI regulations and data privacy frameworks
• Increased investment from French semiconductor firms in India’s chip manufacturing push
• Digital Transactions: India’s UPI (Unified Payments Interface) is set to be integrated into France’s financial system, facilitating payments for Indian travelers and businesses.

➡ Impact: Growth in India’s AI and semiconductor industries, job creation, and fintech integration.

6. Trade and Investment in Maritime and Logistics

Marseille as India’s Gateway to Europe: With India opening a new consulate in Marseille, trade routes via the Mediterranean will become more efficient.

Blue Economy Collaboration: India and France are increasing cooperation on sustainable maritime logistics, green shipping corridors, and port modernization.

➡ Impact: Lower logistics costs for Indian exports and increased maritime security cooperation.

Conclusion: A Strategic Win for India and France

PM Modi’s visit to France has set the stage for deeper economic ties, with tangible benefits across defense, energy, infrastructure, technology, and trade. The economic effects of these agreements will boost bilateral trade beyond $25 billion by 2025 and create thousands of new jobs in both countries. The long-term impact will be visible in India’s strategic autonomy in defense, energy security, and digital transformation.

This visit marks a turning point in Indo-French relations, reinforcing a mutually beneficial economic partnership poised for exponential growth.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

India’s beauty industry is growing faster than ever, making it the world’s fastest-growing online beauty market. With higher incomes and a rising interest in premium products, more Indians invest in beauty and personal care. 

Currently worth $28 billion, the market is expected to reach $34 billion by 2028, growing at 10-11% annually. A young population and a growing demand for high-quality beauty products drive this rapid expansion.

A Blossoming Beauty Market

India’s flourishing beauty market creates opportunities for homegrown brands and global giants. As online sales surge, e-commerce platforms like Nykaa and Amazon are experiencing rapid growth. 

With international brands expanding their presence and local companies scaling new heights, India has emerged as the fastest-growing beauty market. Everyone is eager to tap into this booming industry, from luxury icons like MAC and Dior to beloved homegrown names like Sugar and Lakme.

According to market tracker NielsenIQ, between June and November 2024, beauty e-commerce and quick commerce sales saw a remarkable 39% increase in value compared to the previous year. In contrast, physical store sales grew by just 3%, highlighting the rapid shift toward online beauty shopping. 

Despite the impressive growth, India’s per capita spending on beauty and personal care remains relatively low—$14 compared to $38 in China and $313 in the US. This indicates significant potential for expansion as more consumers invest in beauty products.

E-Commerce – The New Era of Beauty Shopping

The shift toward online beauty shopping isn’t just a passing trend—it’s a fundamental change in consumer behavior, especially among younger generations. According to market insights, as of 2024, 17% of Indian consumers buy beauty products online, up from 13% the previous year. Brazil, the second-fastest-growing online beauty market, lags at 27%.

Both global and Indian beauty brands are adapting to this shift by strengthening their digital presence. Leading e-commerce platforms such as Amazon, Myntra, Blinkit, Zepto, Nykaa, and Reliance Retail’s Tira have become the preferred shopping destinations for beauty enthusiasts.

Homegrown Brands Making Their Mark

Indian companies are also making significant strides. The Good Glamm Group, for instance, has become a major player by acquiring various beauty and personal care brands and digital media companies. Their strategy of integrating content with commerce has resonated well with consumers, contributing to the industry’s growth.

Nykaa Leads the Charge

Nykaa, a major player in India’s beauty e-commerce space, reported a 30% year-on-year growth in beauty orders during the December quarter. Impressively, 70% of orders in the top 110 cities were delivered within a day, showcasing the increasing demand for quick and convenient beauty shopping. 

Nykaa also reported a 61% increase in quarterly profits, driven by strong demand for premium beauty products. Their beauty segment, which includes high-end brands like Estée Lauder and Rihanna’s Fenty Beauty, saw a 27% revenue surge, highlighting the growing consumer preference for luxury offerings. reuters.com

Global Giants Eyeing India

Recognizing the vast potential, international beauty brands are increasingly focusing on India. Estée Lauder, for example, is set to commence local manufacturing, aiming to cater more effectively to the Indian market. This move underscores India’s emergence as a key player in the global beauty landscape.

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Key Factors Driving India’s Beauty Boom

India’s beauty market is expanding rapidly, fueled by several key factors. From the rise of e-commerce to changing consumer preferences, new-age beauty brands are thriving in an industry once dominated by a few established players.

E-Commerce is Democratizing Beauty

The rise of online shopping has removed traditional barriers to entry, allowing emerging brands to compete with industry giants. E-commerce platforms have made beauty products more accessible, enabling startups to tap into a vast consumer base without needing physical retail stores.

Gen Z’s Willingness to Experiment

Gen Z consumers are open to trying new brands and niche products, unlike previous generations. Their preference for innovation, clean beauty, and unique formulations has led to a wave of indie beauty startups challenging legacy brands.

Personalization and Technology-Driven Innovation

With increasing competition, brands focus on personalized skincare, AI-powered recommendations, and customized beauty solutions to stand out. Many companies are leveraging technology and data analytics to create products tailored to individual skin types and preferences.

Loyalty and Customer Retention Strategies

Beauty brands invest in membership programs, exclusive offers, and personalized shopping experiences to secure long-term customer loyalty. Many companies now offer rewards, subscription services, and special discounts to retain their growing customer base.

Billionaires Enter the Cosmetics Industry

India’s booming beauty market attracts the country’s biggest business houses, with major conglomerates making strategic moves into the sector. With demand soaring, industry giants are launching their beauty ventures to capture a share of this fast-growing space.

Reliance made a bold entry into the beauty market with the launch of Tira in 2023, signaling its aggressive push into the sector. Meanwhile, the Tata Group is expanding its presence through Tata Cliq Palette, an exclusive beauty platform catering to online shoppers.

Adding to the competition, Ananya Birla, daughter of billionaire Kumar Mangalam Birla, recently announced the launch of Birla Cosmetics. This new venture aims to introduce a wide range of beauty and personal care products across India, further intensifying the race among top players in the market.

Challenges and Opportunities Ahead

While the outlook is optimistic, companies must navigate challenges such as intense competition and evolving consumer preferences. Recent developments, like the market value decline of Mamaearth’s parent company due to reported losses, highlight the need for brands to stay strong and responsive to market dynamics. reuters.com

India’s beauty industry is on a dynamic upward trajectory, offering abundant opportunities for established players and emerging brands. As the market matures, consumers can look forward to diverse products tailored to their evolving tastes and preferences.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

The trade relationship between India and the United States has long been a cornerstone of both nations’ economic strategies. Over the decades, this partnership has evolved, reflecting shifts in global economic power, policy changes, and mutual interests. Today, as President Donald Trump amplifies his rhetoric on imposing higher tariffs, particularly targeting nations he perceives as “tremendous tariff-makers,” the future of India-US trade ties stands at a critical juncture.

A Historical Perspective

In 1991, as India liberalized its economy, trade in goods between India and the US was valued at approximately $5.42 billion. This figure saw a steady increase, reaching $9.86 billion by 1996. The upward trajectory continued, with bilateral trade in goods surpassing $128 billion in 2022-23. This growth underscores the deepening economic interdependence between the two nations. theprint.in

Current Dynamics

In the fiscal year 2023-24, India’s exports to the US were valued at $77.5 billion, accounting for more than 18% of India’s total exports. Key export sectors include textiles, pharmaceuticals, engineering goods, and IT services. Conversely, imports from the US stood at $42.2 billion, highlighting a trade imbalance that has been a point of contention.

President Trump’s administration has expressed concerns over this trade deficit, emphasizing the need for “fair bilateral trading relationships.” The US has pointed to India’s high tariffs on certain products, such as a 50% duty on apples and 30% on cherries, as barriers to market access for American goods. 

Potential Implications of Increased Tariffs

Should the US proceed with imposing higher tariffs on Indian goods, several scenarios could unfold:

Impact on Indian Exporters:

Elevated tariffs would make Indian products less competitive in the US market, potentially leading to a decline in export volumes. Sectors like textiles and agriculture, which are significant contributors to India’s export basket, could be adversely affected.

Domestic Market Pressures:

Indian industries, particularly smaller steelmakers, are already expressing concerns about the influx of cheaper foreign steel diverted from other markets due to US tariffs on countries like China. It has led to increased competition and price pressures domestically.  reuters.com

Strategic Realignments

In response to tariff challenges, India might seek to diversify its export destinations and reduce dependency on the US market. This rejig could involve strengthening trade ties with other nations and regional blocs.

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Proactive Measures by India

Anticipating potential tariff escalations, India has undertaken several initiatives:

Tariff Reductions:

• Ahead of Prime Minister Modi’s visit to the US, India reduced customs duties on various products, including specific waste and scrap items, ground installations for satellites, and motorcycles. These measures aim to address US concerns and mitigate the risk of reciprocal tariffs.

Energy and Defense Procurement:

• India is considering increasing its energy and defense equipment imports from the US. This strategy alance the trade deficit and strenand strengthens between the two nations.  reuters.com

Looking Ahead

The trajectory of India-US trade relations will depend on several factors:

Bilateral Negotiations

Continuous dialogue will be crucial to address mutual concerns. Both nations have engaged in negotiations to resolve trade frictions, with discussions encompassing market access, tariff structures, and regulatory standards.

Global Trade Dynamics:

• The broader context of global trade, including US-China trade tensions and shifts in supply chains, will influence India-US trade ties. India’s position as a potential alternative manufacturing hub could be both an opportunity and a challenge in this landscape.

Domestic Policy Adjustments:

• To foster a more balanced trade relationship with the US, India may need to reassess its tariff policies and consider further liberalization in certain sectors.

Analyst Perspectives on Escalating Tariff Tensions

Analysts express significant concern over the potential escalation of tariff tensions between India and the United States. The disparity in tariff rates is a focal point; India’s average tariff on U.S. imports is notably higher than the U.S. tariff on Indian goods, exceeding the U.S. rate by more than 10%. This imbalance positions India as particularly vulnerable to reciprocal tariff measures from the U.S. nationthailand.com

The Engineering Export Promotion Council of India has voiced apprehension regarding the possible fallout of U.S. tariff hikes, given that the U.S. remains a top market for Indian engineering goods. m.economictimes.com

In response to these challenges, Prime Minister Narendra Modi is reportedly planning tariff reductions in electronics, medical equipment, and chemicals to boost American exports to India and prevent a trade conflict. reuters.com

Data for Graphical Representation

To illustrate the evolving trade dynamics between India and the United States, consider the following data points: 

This data highlights the increasing trade imbalance, with U.S. imports from India consistently surpassing exports, leading to a growing trade deficit. Such trends underscore the importance of addressing tariff disparities and fostering equitable trade practices to ensure the sustainability of India-U.S. trade relations.

Conclusion

As President Trump’s tariff threats become more pronounced, India and the United States are at a pivotal moment in their trade relationship. While challenges are evident, both nations have opportunities to recalibrate their strategies, address mutual concerns, and strengthen their economic partnership. 

The path forward will require careful negotiation, strategic foresight, and a commitment to fostering a fair and mutually beneficial trade environment.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

India’s Premier Aerospace and Defense Exhibition

Aero India 2025, Asia’s largest aerospace and defense exhibition, will be held from February 10 to 14, 2025, at the Yelahanka Air Force Station in Bengaluru. Organized by the Ministry of Defence, this biennial event will bring together leading global and Indian defense manufacturers, government representatives, and military leaders to showcase advancements in military aviation, aerospace technology, and defense innovation.

Themed “The Runway to a Billion Opportunities,” Aero India 2025 underscores India’s commitment to self-reliance in defense manufacturing while fostering international collaborations. The event is expected to attract over 100 participating countries, 850+ exhibitors, and more than 750,000 visitors, making it the largest edition yet.

Aero India: A Historical Overview and Growth Trajectory

Since its inception in 1996, Aero India has become a global hub for defense partnerships and aerospace innovation. The event has witnessed significant growth in participation and impact over the years.

Edition	Year	Participating Countries	Total Exhibitors	Indian Exhibitors	Foreign Exhibitors	Visitors (Approx.)
1st	1996	12	150	50	100	25,000-30,000/day
8th	2011	45	675	Data not specified	Data not specified	Data not specified
14th	2023	80+	800+	700+	100+	700,000+
15th	2025	100+ (Expected)	850+ (Expected)	750+ (Expected)	100+ (Expected)	750,000+ (Projected)

Past editions have played a crucial role in strengthening India’s defense exports, facilitating major agreements in aerospace technology, and positioning India as an emerging defense manufacturing powerhouse.

Key Details of Aero India

Dates & Venue: February 10-14, 2025, at Yelahanka Air Force Station, Bengaluru.

Theme: “The Runway to a Billion Opportunities”.

Major Attractions:

• Tejas Mk1A, Rafale, and F-35 fighter jets steal the spotlight.
• The iDEX Pavilion showcases India’s defense start-up innovations.
• Live aerial displays from the Indian Air Force, including the Surya Kiran aerobatics team.
• A special focus on UAVs, AI-driven defense solutions, and space technologies.

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Aero India 2025: Global Impact and Strategic Significance

Aero India has grown beyond being a national defense exhibition—it has become a global aerospace and defense hub that attracts top industry players, policy-makers, and military leaders. The 2025 edition is poised to have a far-reaching impact on international collaborations, defense procurement, and India’s growing role in the global aerospace value chain.

1. Strengthening India’s Defense Exports

Aero India 2025 is a pivotal event for India’s defense export strategy, aligning with the country’s goal of achieving $5 billion in annual defense exports by 2025. The event fosters bilateral defense agreements, technology transfers, and co-production deals, positioning India as a key supplier of:

• Indigenous fighter jets (Tejas Mk1A, LCA Mk2)
• Helicopters (HAL Prachand, Dhruv ALH, Light Utility Helicopter)
• Missile systems (BrahMos, Akash, Astra)
• Unmanned Aerial Vehicles (UAVs) (Tapas-BH, Archer, Rustom-2)
• India has already signed significant defense export agreements with Southeast Asian and African nations, and Aero India 2025 is expected to unlock new markets in Latin America and the Middle East.

2. Major International Participation & Partnerships

• Over 100+ countries are expected to participate, with delegations from the United States, France, Russia, the UK, Israel, and Japan showcasing their latest defense technologies. Some key expected partnerships include:
• India-USA Defense Ties: The U.S. is expected to showcase the F-35 Lightning II fighter jet, highlighting its continued push to deepen defense cooperation. Talks may include joint aircraft engine production under the GE-HAL partnership.
• France-India Collaborations: Dassault Aviation is expected to announce further Rafale-M orders for the Indian Navy and expand partnerships with HAL. Safran’s potential tie-up for indigenous fighter jet engines is another discussion area.
• India-Russia Military Cooperation: Despite geopolitical tensions, Russia remains a critical partner. Talks on the Su-30 MKI upgrade program and future BrahMos variants are expected.
• Israel’s Cutting-Edge Tech: Israel will likely demonstrate advancements in electronic warfare (EW) systems, drones, and missile defense solutions, supporting India’s indigenous defense projects.

3. Showcasing India’s ‘Make-in-India’ and ‘Atmanirbhar Bharat’ Drive

• India is positioning itself as a global manufacturing hub for aerospace and defense, reducing reliance on imports and driving indigenization efforts. Aero India 2025 will reinforce:
• Domestic fighter jet production: The Tejas Mk1A and upcoming LCA Mk2 will be key attractions. HAL is ramping up its production to meet domestic and export demands.
• Indigenous UAV and drone technologies: With the rise of drone warfare, India will showcase homegrown UAVs, including swarm drone technology developed under the iDEX initiative.
• Defense start-ups and MSMEs: A dedicated iDEX Pavilion will highlight 50+ Indian start-ups working on AI-driven warfare, autonomous systems, and next-gen battlefield solutions.

4. Expanding India’s Role in the Global Supply Chain

• India is emerging as a key player in the global aerospace supply chain, attracting major investments from leading manufacturers:
• Boeing and Airbus Manufacturing Expansion: Both aerospace giants are ramping up their MRO (Maintenance, Repair, Overhaul) facilities in India, reducing their dependency on European service centers.
• Rolls-Royce, GE, and Safran Engine Co-Development: Talks on co-developing indigenous jet engines for India’s future fighter aircraft will take center stage.
• The Private Sector’s Growing Role: Companies such as Tata Advanced Systems, Mahindra Defence, and Adani Defence are set to unveil joint ventures for aerostructures, radars, and missile subsystems.

5. Indo-Pacific Security and Geopolitical Implications

• Aero India 2025 is a time of heightened global security challenges, making it a critical defense diplomacy platform. The Indo-Pacific region is a major focal point, with India strengthening military cooperation to counterbalance China’s influence.
• Quad Defense Cooperation (India, USA, Japan, Australia): The event will facilitate discussions on joint military exercises, technology sharing, and maritime security partnerships.
• Strengthening Ties with ASEAN: India will push for defense exports to Vietnam, Indonesia, and the Philippines, enhancing regional security collaboration.
• Countering China’s Expanding Military Influence: India will highlight its indigenous military capabilities to demonstrate self-reliance and regional leadership in aerospace and defense.

6. Expected Major Deals and MoUs

With a projected ₹80,000+ crore ($10 billion) in defense contracts, Aero India 2025 is set to witness major agreements, including: 

• Finalization of the Indian Multi-Role Helicopter (IMRH) project
• Additional fighter jet orders (Rafale-M, Tejas Mk1A, Su-30 MKI upgrades)
• Expansion of the BrahMos missile export program
• Strategic UAV collaborations with Israel and the U.S.
• India’s Rise as a Global Aerospace Hub

Aero India 2025 is an exhibition and a catalyst for India’s global aerospace ambitions. The event will solidify India’s status as a self-reliant defense power, open doors to new partnerships, and set the stage for future innovations in military aviation and space technology.

With record-breaking participation, high-profile collaborations, and groundbreaking deals, Aero India 2025 is “The Runway to a Billion Opportunities.” 

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

In a significant move, the Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points, bringing it down to 6.25%. This is the first rate cut in almost five years and aims to boost the economy as growth slows.

This is the first rate cut since May 2020. Previously, the RBI had kept the repo rate unchanged at 6.5% for eleven straight meetings. In its December policy review, the MPC voted 5-1 to hold rates, focusing on controlling inflation while ensuring economic stability. Economic Times

Hopes for a rate cut grew after the Union Budget for FY26, which reduced the tax burden on individuals to boost spending. Additionally, the budget maintained the capital expenditure target for the next fiscal year at nearly the same level as last year’s budgeted amount. However, it has been revised this year. Economic Times

Market Reaction: Auto & Realty Stocks Gain, Banks Slip

After the announcement, auto and real estate stocks jumped by up to 3%, while banking and financial stocks declined by nearly 1.5%. Auto stocks like Apollo Tyres, Ashok Leyland, M&M, and Samvardhana Motherson International gained up to 3%. Lodha, Godrej Properties, and Oberoi Realty rose between 1% and 2.6% in the real estate sector.

Meanwhile, banking and financial stocks declined, with Bajaj Finance, SBI, Axis Bank, and ICICI Bank among the top losers from the Nifty Financial index, falling up to 1.2%.

Reasons Behind the Repo Rate Cut

The Monetary Policy Committee (MPC) unanimously decided to cut the rate. RBI Governor Sanjay Malhotra explained that while growth is improving, it is still lower than last year. With inflation under control, the central bank saw an opportunity to lower rates to support the economy while maintaining price stability.

livemint.com

RBI’s Policy Moves: CRR Cut and Growth Projections

CRR Reduction to Boost Liquidity	-In its December policy review, the RBI kept the repo rate unchanged. -It reduced the Cash Reserve Ratio (CRR) by 50 basis points, lowering it to 4%. -This step aims to improve liquidity in the banking system and support credit growth.
Growth Projections for FY25	-The RBI has projected India’s real GDP growth to be 7.2% for FY 2024-25. -In contrast, the Economic Survey estimates a lower growth of 6.4%, aligning with NSO projections.
RBI’s Growth Outlook for FY26	-The Monetary Policy Committee (MPC) expects India’s GDP to grow 6.7% in FY26.- The RBI projects India’s GDP growth for FY26 at 6.7% in Q1, rising to 7% in Q2 and then moderating to 6.5% in Q3 and Q4.  -The December 2024 forecast was revised downward, reflecting evolving economic conditions.

Understanding the Repo Rate

The RBI’s repo rate cut was much awaited. Let’s understand the repo rate and why it matters. It’s the interest rate at which the RBI lends money to banks. When the repo rate is lowered, borrowing becomes cheaper for banks, allowing them to offer lower interest rates on loans. This helps boost spending and investment, supporting economic growth.

Know More:  SEBI Registered investment advisory |  Stock investment advisory

Current Economic Indicators

India’s economic growth has been challenging. The GDP growth rate fell to 5.4% in the September quarter, the lowest in two years. Projections for the current fiscal year have been revised to 6.4%, a decline from the 8.2% growth observed in 2023-24. High price pressures, stagnant wages, weak consumption, and recent corporate earnings disappointments have contributed to this slowdown.

Inflation Trends

Despite retail inflation remaining above the RBI’s target, there has been a declining trend. It has eased to a four-month low, and expectations are that it will continue to decrease, barring any unexpected supply shocks. This downward trend in inflation has provided the RBI with the flexibility to reduce the repo rate to support growth. reuters.com

Impact on Borrowers and Investors

For retail borrowers with floating-rate loans, this rate cut is welcome news. As banks pass on the benefit of the lower repo rate, equated monthly installments (EMIs) are expected to decrease, making loans more affordable. Borrowers also have the option to keep their EMIs constant while reducing the tenure of their loans. livemint.com

On the flip side, fixed deposit investors might see a reduction in interest rates offered by banks. With the repo rate cut, banks may lower the rates on fixed deposits, affecting returns for investors seeking safe investment avenues.

Market Reactions

The stock markets responded positively to the rate cut. Sectors sensitive to interest rates, such as financials, automobiles, and real estate, saw gains. The Nifty 50 index increased by 0.35% to 23,684.2, while the BSE Sensex gained 0.28% to 78,274.35. However, the rupee continued to struggle, weakening slightly to 87.47 per dollar.

Looking Ahead

The rate cut boosts the economy, but the RBI is cautious. It follows a balanced regulation approach and lets market forces decide the exchange rate, stepping in only to control extreme fluctuations.

Conclusion

The RBI’s decision to cut the repo rate after a prolonged period reflects its commitment to supporting economic growth while keeping inflation in check. As this policy unfolds, stakeholders will keenly observe its impact on various sectors of the economy.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

Gold prices surged by ₹400, surpassing the ₹85,000 mark per 10 grams for the first time, reaching an all-time high of ₹85,300 on 3rd February 2025. Market experts suggest that gold prices are likely to remain elevated given the current volatility, with potential trade wars, market fluctuations, and policy shifts

Concerns that President Trump’s tariffs on Canada, China, and Mexico could lead to inflation have kept the yellow metal prices near record highs. Although Trump has paused tariffs on Mexico and Canada for 30 days, the tariffs on Chinese goods are still in effect. On 4th February 2025, gold prices stayed close to the previous all-time high, driven by ongoing worries about inflation and a potential economic slowdown. Source: Moneycontrol

The yellow metal with 99.9% purity ended at ₹84,900 per 10 grams on 1st Feb 2025, while 99.5% purity gold extended its rally for the fourth consecutive session, rising by ₹400 to reach ₹84,900 per 10 grams. In the prior trading session, it had closed at ₹84,500 per 10 grams.

On Saturday, April, gold futures soared by ₹1,127 to hit a record high of ₹83,360 per 10 grams, coinciding with Union Finance Minister Nirmala Sitharaman’s presentation of the Union Budget 2025-26. Since January, the yellow metal prices have increased by ₹5,510 (7%), rising from ₹79,390 per 10 grams, according to the All India Sarafa Association. Source: Mint/CNBCTV18

This significant rise has left many wondering: What’s fueling this rally? Let’s examine the key factors driving this upward trend in yellow metal prices.

Factors Driving Gold Prices to an All-Time High

Market Volatility and Safe-Haven Appeal

Market volatility, triggered by global events, often prompts investors to turn to safe-haven assets like this precious metal. Amid growing concerns about a potential Trade War 2.0 with the United States, gold prices surged on the Multi Commodity Exchange (MCX) as investors boosted their positions. Experts highlighted that these trade tensions intensified the demand for gold, with many seeing it as a secure investment during uncertain times. Source: Mint

Rupee Weakens, Boosting Yellow Metal Demand

The rupee dropped by 55 paise on Monday, reaching a record low of 87.17 (provisional) against the US dollar. This fall came after global market sentiment weakened due to the Trump administration’s decision to impose tariffs on Canada, Mexico, and China, making gold a more attractive option.

International Yellow Metal Prices Reach Record Highs

International gold futures sharply rose, hitting a record high of USD 2,862.90 per ounce on Friday. This price spike reflects growing demand for gold as investors seek stability amid global economic uncertainty. Source: Mint

Wedding Season Drives Sustained Demand for Gold

Gold prices have remained elevated, partly due to the ongoing wedding season, which traditionally sees a spike in demand. According to the All India Sarafa Association, jewelers and stockists have been consistently purchasing gold to meet the needs of consumers preparing for weddings. In India, gold is considered an essential part of wedding traditions, making it one of the most desired commodities during this time of year.

Global Public Debt Concerns

Increasing global public debt is another reason investors are turning to gold. The International Monetary Fund (IMF) warns that global public debt could rise to 115% of total GDP within three years, nearly 20% higher than current levels. This rise is due to weak global economic growth, financial challenges, fiscal issues, and unstable economic policies. Such uncertainties make gold a more appealing safe-haven investment. news18.com

The recent surge in gold prices past the ₹85,000 mark results from a confluence of factors, including global geopolitical tensions, US political uncertainty, economic policies, domestic demand during festive seasons, concerns over rising global public debt, and overall market volatility.

Industry experts suggest that this week is critical for commodities, as key US macroeconomic data — including JOLTs (Job Openings and Labour Turnover Survey) job openings, ISM (Institute for Supply Management Services ) services, ADP (Asian Development Bank) employment, and non-farm payroll reports — are set to be released. These figures are expected to shape the direction of bullion prices.  As these elements evolve, investors will likely watch gold as a preferred safe-haven asset.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

The Union Budget 2025 has been unveiled, leaving many investors pondering: What lies ahead for the markets? Will the recent fiscal policies bolster economic growth or introduce new challenges? Let’s delve into the key aspects of the budget and analyze their potential impact on various sectors.

Personal Income Tax Reforms

A significant highlight of the budget is the reduction in personal income tax rates, aiming to enhance the spending capacity of the middle class. The tax exemption threshold has been raised from ₹6 lakh to ₹12 lakh, and tax rates for higher income brackets have been reduced. This move is expected to boost household consumption, savings, and investment.

Capital Expenditure and Infrastructure Development

The government has allocated ₹11.1 lakh crore for infrastructure projects, marking an 11% increase from the previous year. This investment will be directed toward improving roads, railways, airports, and other critical infrastructure across the country. The goal is to boost economic growth by enhancing connectivity and providing better facilities.

Sectoral Impacts

• Consumer Goods and FMCG: The increase in disposable incomes due to tax cuts is anticipated to drive demand in the Fast-Moving Consumer Goods (FMCG) sector. Companies like Hindustan Unilever and ITC may experience heightened sales as consumers have more spending power.
• Banking and Financial Services: The government’s plans to recapitalize public-sector banks and promote financial inclusion have made the banking sector a key area of focus. Institutions such as HDFC Bank and State Bank of India could see increased activity due to enhanced lending capacities and a broader customer base.
• Green Energy and Electric Vehicles (EVs): With a renewed focus on sustainability, the government has proposed new green energy and EV adoption incentives. Solar power, wind energy, and EV manufacturing companies will likely benefit. Prominent stocks in this space include Tata Power and Adani Green Energy.

Higher Credit Availability to Agriculture and MSME Sectors

The budget emphasizes increased credit availability to the agriculture and Micro, Small, and Medium Enterprises (MSME) sectors, which fall under Priority Sector Lending (PSL) regulations. Banks are mandated to allocate at least 40% of their loan portfolios to the PSL segment. 

However, this segment has historically exhibited a higher-than-average delinquency ratio and is politically sensitive. Consequently, markets may express concerns regarding the prospects of banking and financial sector stocks. 

Notably, these stocks command a 34.60% weightage in the broad-based Nifty50 index. Therefore, any negative sentiment in this sector could significantly influence broader market movements. Source: Mint

Government Borrowing and Fiscal Implications

The government has outlined gross borrowings of ₹14.82 trillion, with ₹11.54 trillion to be raised through dated securities. Some of these borrowings will be met through small and public savings schemes. Given the substantial amount the government intends to raise from the money market, questions arise about the Reserve Bank of India’s (RBI) capacity to implement aggressive rate cuts in the upcoming monetary policy meeting. 

Maintaining elevated interest rates while increasing market borrowings could lead to a weakening rupee and “imported inflation,” potentially impacting banking and financial stocks, which are significant components of market indices.

Change in Asset Prices 

Security	24 Jan’25	31 Jan’25	% Change
Nifty 50 (Spot)	23092.2	23508.4	1.80%
Bank Nifty (Spot)	48367.8	49587.2	2.52%
Gold (MCX)	79601	82100	3.14%
Silver (MCX)	91189	93465	2.50%
Crude Oil (MCX)	6476	6335	-2.18%
Natural Gas (MCX)	339.5	268	-21.06%
DXY	107.465	108.501	1.036
USDINR (NSE)	86.265	86.7725	0.5075
10 year Bond Yield	6.72	6.7	-0.02
NSE Market Cap	41677614	42122796	1.07%
MWPL	38.98	8.2	-30.79
DJIA	44424.25	44544.66	0.27%
Nasdaq	21774.01	21478.05	-1.36%
S&P 500	6101.25	6040.52	-1.00%

Know More:   SEBI registered investment advisory |  Stock investment advisory

Market Sentiment and Investor Behavior

Statistical data indicates that retail investors are optimistic, while institutional investors, or “smart money,” have not significantly increased their exposure. Post-budget periods typically involve a few days of detailed analysis before markets stabilize. In this instance, the specifics of the new Income Tax Act are pending, and the RBI’s interest rate decision is awaited. 

Public Sector Undertakings (PSUs) and Key Sectors Volatility:

• Public sector banks, power, infrastructure, defense, logistics, and energy stocks are expected to witness heightened volatility in the coming days.
• Market participants will closely monitor these sectors as they react to budget allocations and policy changes.
  

Industrial Metals and Mining Sector:

• Signs of profit-taking are emerging in industrial metals, which could lead to a decline in stock prices for metal and mining companies.
• Investors may see short-term corrections in these stocks due to shifting commodity market trends.
  

Bullion Market Dynamics:

• Safe-haven buying in bullion is evident due to capital flight, driving increased demand for gold and silver.
• Investors will likely buy on price dips, further stabilizing the bullion market.
  

Futures Market Trends:

• The capital-intensive and high-volatility futures segment saw increased turnover contribution.
• Most of this activity is attributed to traders rolling over positions from the expiring series to the upcoming monthly series. The presence of dual turnover suggests firm conviction among traders.

Options Market Activity:

• The lower-risk index options segment experienced a sharp decline in turnover, reflecting the lowest level of risk appetite in derivatives trading. In contrast, stock options turnover saw an uptick as traders rolled over their positions, indicating a preference for higher-risk trades.
  

Banking Sector Performance:

• Banking stocks led the recent market rally, driven by expectations of personal income tax cuts and a possible RBI rate cut. Indian 10-year bond yields eased, providing a boost to banking stocks.
• However, the rupee depreciated against the US dollar, limiting market gains.
  

Market-Wide Position Limit (MWPL) and NSE Trends:

• MWPL fell routinely on expiry, reflecting adjustments in market positioning.
• The increase in NSE’s market capitalization suggests strong retail participation and investor confidence in select sectors.

Global Economic Context

It is essential to consider the global economic environment when evaluating the budget’s impact. International trade tensions and potential slowdowns in significant economies could influence India’s export-driven sectors. Additionally, fluctuations in global commodity prices may affect domestic industries. Investors should remain vigilant about these external factors, which can significantly impact market dynamics.

Conclusion

The Union Budget 2025 introduces measures to stimulate economic growth through tax reforms and increased infrastructure spending. While specific sectors stand to benefit, the overall market trajectory will depend on effective implementation and external economic conditions. Investors should stay informed and consider domestic and global policies when making investment decisions.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

The Federal Reserve’s recent decision to hold interest rates steady has left investors reassessing their expectations. If markets were hoping for early rate cuts, Chair Jerome Powell clarified that they are not coming anytime soon. This shift in stance has forced global investors to recalibrate their strategies, as previous expectations of rate cuts starting in March now seem overly optimistic.

For Indian markets, the challenges extend beyond the Fed’s policy. Relentless foreign institutional investor (FII) outflows, a mixed corporate earnings season, and the upcoming Union Budget are shaping the near-term outlook. With limited policy flexibility, volatility will likely persist, and investors may need to adjust their expectations accordingly.

The Fed’s Stance: Strong Dollar, Weaker Emerging Markets

Powell’s firm stance on interest rates underscores the Fed’s commitment to cooling inflation before considering any cuts. A higher-for-longer rate environment strengthens the US dollar, reducing the appeal of emerging market equities—including India.

A strong dollar often translates to capital outflows from developing economies, as investors favor high-yielding, safer US assets. The impact on Indian equities is direct: capital flight by FIIs, increased volatility, and pressure on stock valuations.

Foreign Investors Exit 

Foreign investors pulled $8 billion from Indian equities in January alone. Concerns over high valuations and global yield movements have driven this withdrawal. As US bond yields rise, FIIs find better returns in developed markets, making India a less attractive destination.

Domestic Investors Step In (For Now)

Domestic institutional investors (DIIs) have been absorbing much of this selling pressure, preventing a sharper market correction. However, this trend may not be sustainable in the long run. If Powell delays rate cuts further, FIIs may continue selling, testing the resilience of DIIs and retail investors.

Since September, banking and IT stocks have shown resilience, but most other Nifty stocks have struggled. Mid- and small-cap stocks have been hit particularly hard, with 30-50% corrections. The buy-on-dips strategy is challenged as falling stock prices no longer guarantee attractive valuations, significantly when earnings growth is slowing.

Earnings Growth: A Reality Check

The Q3 earnings season has been mixed, with margin pressures and cautious management outlooks signaling tougher times ahead. Market valuations depend on earnings growth to justify stock prices. However, with corporate earnings slowing and no immediate rate cuts, the market may struggle to climb higher.

Nifty’s FY26 earnings growth is projected at 12%, but fund managers warn that downward revisions are possible. This makes the upcoming Union Budget even more crucial as investors look for policy signals to gauge future economic growth.
Source: Money Control

The Union Budget: Fiscal Discipline Over Hype

This year’s Budget is unlikely to bring sweeping policy changes, but a few key elements will be closely watched:

1. Fiscal Deficit Management – The government aims to maintain a fiscal deficit target of 4.5% for FY26, limiting room for aggressive spending.
2. Capital Expenditure—The capex target for FY25 is expected to increase marginally from ₹11.1 lakh crore. However, the actual spending gap could be significant, given the past differences in budgeted vs. actual expenditures.
3. Sector-Specific Incentives – Continued support for infrastructure and manufacturing could boost the market sentiment.

Unlike previous years, there has been no pre-budget rally. Historically, markets tend to rise in anticipation of growth-friendly measures. This time, the subdued sentiment suggests that any positive surprises in the Budget could trigger a short-term rebound.

However, major tax cuts or stimulus spending are unlikely, as the government focuses on fiscal discipline rather than short-term market appeasement.

What Lies Ahead for Indian Markets?

With the Fed standing firm, FIIs continuing to sell, and earnings growth slowing, the Indian stock market will likely remain range-bound in the near term. In such a scenario, identifying money-making opportunities will be key.

• Banking and life insurance stocks appear reasonably priced and could offer stability.
• Stock selection will be crucial, as companies with strong earnings command premium valuations.
• Mid- and small-cap stocks remain vulnerable to corrections if earnings fail to meet expectations.

The Broader Global Context

The Federal Open Market Committee (FOMC) meeting did not have a significant impact, as investors await more definitive guidance. Instead, policy announcements from Donald Trump’s administration could emerge as a major driver of market sentiment.

The operating environment remains challenging, with elevated US yields and a strong dollar. The Federal Reserve must also consider the impact of Trump’s potential economic policies, including sweeping tariffs, tax cuts, and other inflationary measures.

How the Fed’s Cycle Could Shape Indian Markets

Historically, Fed rate cuts weaken the US dollar, making emerging market assets more attractive. Lower US interest rates also increase global liquidity, prompting investors to seek higher returns in riskier markets like India.

Powell’s cautious approach means rate cuts will only happen once inflation is under control. If the Fed turns more supportive, it could boost Indian markets. However, worries about a global slowdown might keep foreign investors away from riskier markets like India. Source: Economic Times

Powell’s Balancing Act Amid Uncertainty

Powell has acknowledged that forecasting inflation trends has become increasingly complex. Trump’s economic policies could further complicate matters by fueling inflation through protectionist measures.

The Fed may maintain restrictive rates for longer to keep inflation in check, making borrowing costlier and slowing down economic activity. Powell and his team must navigate these uncertainties carefully to balance growth and price stability.

The Bottom Line

The Fed is not rushing to cut rates, and FIIs are pulling out of Indian equities. The Union Budget will likely prioritize fiscal prudence over market-friendly measures, making easy gains difficult.

For investors, this is a stock-picker’s market. Companies with strong fundamentals will continue to attract premium valuations, while weaker stocks may face prolonged corrections. As the tide turns, only well-positioned portfolios will weather the storm.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.