Week ending 22nd Feb 2025
# 1 Markets
The Indian stock market extended its losses for the fourth consecutive session, reaching an eight‐month low amid persistent global economic concerns and significant foreign institutional investor (FII) outflows. The benchmark indices closed on Friday with the Sensex at 75,311 and the Nifty at 22,795. While hopes have been riding on a corporate earnings pickup to provide relief, as per data published by a private agency, the PAT of Nifty 50 companies grew a modest 5% in Q3FY25 marking third straight quarter of single digit profit growth, a weak run unseen since the pandemic.
The MPC minutes had raised hopes for rate cuts and softened yields, but a USD 10 billion foreign exchange swap on Friday surprised bond markets, suggesting reduced Open Market Operations. This could adversely affect longer-term rates and steepen the yield curve, even as short-term yields moderated; consequently, the domestic 10-year yield closed at 6.81%.
In the United States, equity markets suffered their worst performance of 2025 on Friday amid stagflation concerns, fuelled by weak economic data. The PMI fell to 49.7—a 25-month low below the contraction threshold—resulting in declines of 1.7% in both the Dow Jones Industrial Average and the S&P 500, while the Nasdaq dropped by 2.2%. In the bond market, yields initially declined following earnings from Walmart, which indicated a slowdown in consumer spending and weaker growth prospects. This development increased the likelihood of further rate cuts, with the U.S. 10-year yield falling to 4.43% on Friday.
# 2 RBI
2.1 RBI has issued a notification mandating that financial institutions use dedicated number series for customer communications.
- Under this directive, transactional calls—such as repayment reminders—must be made using ‘160’ series numbers, while promotional calls are restricted to ‘140’ series numbers, in accordance with Telecom Regulatory Authority of India (TRAI) guidelines.
- Additionally, the move effectively removes WhatsApp calls from the recovery process due to privacy and monitoring concerns under stricter data protection laws.
While formalising the calling channels could enhance accountability and improve collaboration with organised corporate debt recovery agencies, this standardisation may complicate debt recovery efforts, as wilful defaulters might block calls from these designated numbers.
2.2 RBI on Tuesday unveiled RBIDATA, a mobile app designed to provide users with easy access to macroeconomic and financial statistics related to the Indian economy.
- The app aims to make economic data more accessible and user-friendly by presenting it in a visually engaging format.
- RBIDATA offers over 11,000 different series of economic data, covering a wide range of areas to give users a comprehensive view of India’s economy.
- Users can view time series data through interactive graphs and charts and also download data for further analysis.
- For those seeking banking services, the app features a ‘Banking Outlet’ section, allowing users to locate banking facilities within a 20-kilometer radius of their current location. This addition is expected to make it easier for individuals and businesses to find nearby banking services.
RBI Website with its rich content and access to needed information is already considered as one of the best from any regulator. This app would make it much more user friendly.
2.3 As per RBI monthly bulletin published last week,
- India’s economy has regained momentum, with consumption demand expected to improve amid moderating inflation and tax relief.
- Observation based on HFIs like vehicle sales, air traffic and GST e-way bills – more cars on road, more people flying and more things being shipped – exhibit all signs of growth.
- Rural demand is supported by a robust agriculture sector, while urban demand is buoyed by higher disposable incomes and income tax relief measures announced in the budget.
- However, global financial uncertainties, volatile energy prices, and adverse weather events could pose risks.
But there’s a risk. Strong US dollar, compared to the Rupee, is making investors nervous, and they’re pulling money out of India. Also, global trade uncertainty and a slowing world economy could play spoilsport to India’s growth. So, while things look good, we need to keep an eye on that global turbulence.
2.4 RBI has proposed draft norms on foreclosure of loans.
- No foreclosure and prepayment penalties on floating-rate loans for retail and MSME borrowers, including loans for business purposes to individual borrowers.
- In the case of MSE borrowers, these instructions shall be applicable up to the aggregate sanctioned limit of ₹7.50 crore per borrower.
- The guidelines also mandate no minimum lock-in period and prohibit retrospective charges, sometimes levied at the time of foreclosure/ prepayment of loans that were waived by the lenders and not disclosed in advance to the borrowers.
The current penalty on personal loans for retail borrowers is 4-5% of the outstanding principal and divergent practices are prevalent amongst banks/NBFCs leading to customer grievances and disputes. The move if implemented would enhance transparency and customer protection.
2.5 Key Takeaways from the NBFC Sector Review – Q3 FY25 (Anand Rathi Research)
- AUM growth across NBFCs remained robust, with an average increase of 28% YoY.
- Loan Against Securities (LAS) grew fastest (31.5% YoY), followed by rural sales finance (29%).
- Gold loans and car loans increased by 14.2% and 12.5% QoQ, respectively.
- NBFC Net Interest Margins (NIMs) remained stable despite liquidity tightening, with expectations of easing in FY26.
- Provisioning offset otherwise strong operational growth across NBFCs.
- Cost of Funds saw minor increases, but rate cuts in FY26 are expected to improve liquidity
- Most NBFCs maintained stable asset quality, with gross stage-3 (GS3) and net stage-3 (NS3) ratios seeing slight declines YoY.
# 3 SEBI
3.1 SEBI has proposed stricter disclosure requirements for REITs and InvITs in their public offer documents. Key changes include:
- Trusts must provide combined financial statements, including details from all linked entities, even if the trust is newly operational.
- Post-listing, trusts are required to submit quarterly, consolidated, and audited financial reports, replacing the current option for condensed statements.
- The proposals mandate the disclosure of the net borrowing ratio.
By ensuring that REITs and InvITs share detailed and up-to-date financial information, investors will be able to make more informed decisions. These measures aim to enhance transparency and protect investors.
3.2 SEBI last week, has proposed a new security framework for online trading to safeguard investors against unauthorized transactions.
- Key measures include linking trading accounts with registered SIM cards—similar to the UPI model—and mandating biometric authentication, such as fingerprint or facial recognition, for account access.
- The framework also incorporates proximity-based login for multi-device use, QR code-based verification for non-mobile devices, and additional controls that allow investors to monitor and temporarily lock their accounts.
By linking the trading account to a registered mobile device, investors can be rest assured that only authorized users will be able to execute trades.
3.3 SEBI in its consultation paper published on Feb 21 has proposed key changes amending the regulatory framework for Angel Funds. Key recommended changes include:
- Inclusion of Accredited Investors (AIs) as Qualified Institutional Buyers (QIBs) – to allow broader pool of discerning investors to participate in Angel Funds.
- Removal of the 200-Investor Cap for Angel Funds as AIs are being reckoned as QIBs and thus exempt from the cap while limiting the 200-investor limit per investee company thereby enabling larger no of accredited investors to participate
In summary, these proposed changes are expected to enhance the ability of Angel Funds to raise capital, promote greater investor protection, and ultimately contribute to a more robust funding environment for start-ups in India.
While the amendment is well intended, it may be added that The AI limits and conditions are same as for large value funds. US has $1M net worth for Accredited investor qualification, with per capita income of USD 80k and India at USD 10K. There is a case for lowering the net worth and income limit for AI.
3.4 SEBI has announced a new initiative benefitting investors.
- Investors can now directly access data from depositories and stock exchanges without the risk of fraud, thanks to new apps launched by NSDL and CDSL.
- These apps, SPEED-e and MyEasi, help investors manage their portfolios in one place, eliminating the need for multiple platforms. for a couple of seconds
The proposed unified apps would help to consolidate demat statements and simplify portfolio management besides reducing fraud risks misled by fraudulent statements from brokers.
# 4 Insurance
4.1 IRDAI has mandated that life and health insurers implement the Bima-ASBA facility
- This enables policyholders to block premium funds in their bank accounts via UPI until the insurance policy is officially issued.
- This mechanism, similar to the ASBA system used in the IPO market, prevents unauthorized deductions and delays in refunding payments, ensuring that funds remain in the policyholder’s account and continue accruing interest until acceptance is confirmed.
It is felt that this move will enhance transparency, security, and efficiency in premium payments, resolving many disputes related to the timing of policy issuance.
# 5 Economy
5.1 As per HSBC Flash PMI data released last week,
- India’s private sector output surged to a six-month high in February,
- Composite Output Index rose to 60.6, up from 57.7 in January, marking its strongest pace of growth since August 2024 and remaining well above its long-term average.
- Services PMI Business Activity Index climbed to 61.1 (January: 56.5), its highest level in nearly a year.
- Manufacturing sector growth moderated slightly, with the Manufacturing PMI easing to 57.1 (January: 57.7), though still reflecting robust expansion.
A healthy acceleration in new orders and output bolstered business confidence, leading to a surge in hiring activity. Service providers faced greater capacity pressures, leading to further hiring and increased backlog accumulation.
5.2 As per data released by Govt last week,
- In January, India’s merchandise trade deficit widened to a two‐month high of $22.99 billion,
- driven by rising imports at $59.42 billion (gold 40.8% higher imports)
- merchandise exports declining to $36.43 billion
- services exports increasing to $38.55 billion
- Over the period from April 2024 to January 2025, merchandise exports grew modestly by 1.39% annually, whereas imports rose by 7.43%.
- Key export sectors such as electronics, engineering goods, rice, pharmaceuticals, and gems and jewellery showed notable growth despite global challenges like weak demand, geopolitical tensions, and volatile commodity prices.
- Additionally, non-petroleum exports registered significant gains, reinforcing India’s resilient trade performance with major markets including the US, UAE, and the Netherlands.
India’s foreign trade has been hit by weak demand in major markets, geopolitical tensions and volatile commodity prices. Goldman Sachs estimates that Trump’s reciprocal tariffs on imports could impact India’s GDP by 0.1-0.6%, particularly affecting textiles, electronics, and pharmaceuticals exports.
# 6 PE/VC
6.1 The Indian National Space Promotion and Authorisation Centre (IN-SPACe), an arm of the Department of Space (DoS), on Wednesday, announced the Technology Adoption Fund (TAF) worth ₹500 crore to support early-stage space technologies developed by companies into commercially viable products.
- Startups will now be able to secure financial support up to 60% of the project cost for startups and MSMEs and 40% for larger industries with a maximum funding cap of ₹ 25 cr. per project.
The fund will act as a complementing initiative with the Ministry of Defence’s iDEX programme and a ₹1,000 crore venture capital (VC) fund acting as a catalyst for the Indian deep tech and space tech landscape. This initiative adds to the country’s growing risk capital and bolsters Govt’ commitment in harnessing long-term benefits of R&D.
6.2 Key Takeaways from the Global Private Markets Report 2025 (McKinsey)
- 2024 saw a resurgence in PE dealmaking (+14% YoY to $2T) after two years of decline.
- Exit activity improved, particularly sponsor-to-sponsor exits (+16% in value).
- For the first time since 2015, PE distributions to LPs exceeded capital contributions.
- LPs increased their target PE allocations from 6.3% (2020) to 8.3% (2024), yet fundraising remains difficult due to liquidity constraints.
- Large buyout deals ($500M+) increased in both count (+3%) and value (+37%).
- Entry multiples rebounded to 2021-22 levels, reflecting improved financing conditions.
- PE operators increasingly focus on operational improvements, as leverage-driven returns decline.
- AI and data science adoption are top priorities for PE firms to drive portfolio-wide efficiencies.
- Technology and Financial Services saw the highest PE activity growth.
- Private equity investment has outperformed public equity investment since the turn of the millennium on a longer-term basis though during the last 3 years they gave muted or negative returns due to bull run witnessed in public markets.
| Years | Growth Equity | MSCI World Index | S&P 500 | |
| 3 years | -5.2% | 9.65% | 11.9% | (Q42021-Q32024) |
| 5 years | 14.3% | 13.6% | 16% | (Q42019-Q32024) |
| 10 years | 14.5% | 10.6% | 13.4% | (Q42014-Q32024) |
| 25 years | 10.7% | 6.9% | 8.2% | (Q41999-Q32024) |
# 7 – Will Bank of England default?
- Following Trump’s import duties, COMEX in New York saw a surge in physical gold demand, triggering the transfer of 393 tonnes from London’s LBMA warehouses.
- This large-scale transfer left London with significantly reduced gold reserves, leading paper gold holders to demand immediate delivery.
- The Bank of England stated it requires 4–8 weeks to acquire additional gold, effectively defaulting on its short-term delivery obligations.
Nobody wants to be left sitting on paper gold, worth nothing and there appears a premium for buying physical gold. In London, about 4% of the gold sold, is actual physical metal while 96% is paper and the market would default if a fraction demanded their right for physical metal gold
(source: twitterati)