# 1 Market
We may have to navigate multiple Black Swan events through 2025. After a brief revival in sentiment, aided by India’s careful navigation of the 90-day tariff pause initiated by President Trump and a softening trade stance, market stability was disrupted by a gruesome attack on civilians in Kashmir. The incident sharply escalated Indo-Pak tensions, triggering a broad-based sell-off. The BSE Sensex and Nifty 50 closed at 79,212 and 24,039, respectively. Q4 earnings, FII’s reactions, and reaction from nuclear armed neighbour would drive markets ahead.
In the bond markets, liquidity infusion measures and strong foreign inflows initially pushed yields lower, with the 10-year government bond yield touching 6.32% – the lowest level since 2021. However, consistent with the equity market’s risk-off reaction to geopolitical tensions, bond yields spiked despite expectations of continued liquidity support and potential rate cuts by the Reserve Bank of India. The 10-year yield closed higher at 6.36% on Friday. Barring a full-scale geopolitical escalation, we anticipate yields to naturally soften towards 6.25% in the coming weeks.
Meanwhile, US equity markets staged a strong rally over the past week, confirming a new uptrend amid optimism surrounding potential tariff relief from the Trump administration. The S&P 500 and Nasdaq Composite cleared key resistance levels, with all three major indices recording robust weekly gains of 3–5%.
The US bond market also reflected a shift in sentiment. Encouraged by President Trump’s call for rate cuts and supported by benign economic data, the US 10-year Treasury yield fell 16 basis points to close at 4.25%, reversing all losses recorded in the preceding week.
# 2 Banking
2.1 RBI last week notified change in Liquidity Coverage Ratio [LCR] which has come as a big relief to banks prompting Bankex rally.
Key Changes:
- Additional run-off for deposits accessible via Internet and Mobile Banking [IMB] cut to 2.5% (from proposed 5%). Stable deposits: 7.5% lower than earlier proposed 10% and less stable deposits: 12.5% lower than proposed 15%.
- Unsecured wholesale deposits from non-financial entities to attract a 40% run-off rate vs 100% proposed earlier.
- Implementation Timeline extended to April 1, 2026 (vs. April 2025 initially).
Positive Outcomes:
- Freed-up lendable resources estimated at ₹2.7–3.0 lakh crore (ICRA) and potential to boost credit growth by 1.4–1.5%.
- Sector-wide Net Interest Margin (NIM) could improve by 1–18 basis points (bps) across banks.
The revised norms are expected to increase aggregate banking system LCR by ~6% compared to current rules (based on December 2024 data).
The evolution of the LCR framework post-Silicon Valley Bank [SVB] crisis in India reflects a thoughtful balance by the RBI – strengthens liquidity buffers without choking credit and enhances banking sector stability in a digital banking era. One-year extension allows gradual adjustment, reducing execution risk.
2.2 The Supreme Court of India, in a landmark judgment delivered on April 25, 2025, has clarified the legal distinction between administrative actions taken by banks under the RBI Master Directions and criminal proceedings initiated under penal laws.
Key Highlights
- The Court emphasized that the setting aside of a bank’s administrative action—such as classifying an account as fraudulent—on procedural grounds does not preclude the initiation or continuation of criminal proceedings against the borrower
- The Court clarified that the filing of an FIR, which initiates a criminal investigation, is a separate legal action from administrative decisions made by banks. Therefore, the invalidation of a fraud classification on procedural grounds does not automatically invalidate the FIR or halt criminal investigations.
Implications
- This judgment empowers banks to pursue criminal proceedings against defaulters even if their administrative actions, such as fraud classifications, are challenged or set aside on procedural grounds.
- Even if a fraud classification is overturned due to procedural issues, borrowers may still face criminal investigations and prosecutions based on the substantive evidence of fraud.
The Supreme Court’s decision delineates the boundaries between administrative and criminal proceedings in the context of loan defaults and financial fraud. It provides clarity on the legal avenues available to banks and reinforces the importance of due process in administrative actions, while affirming the autonomy of criminal investigations and prosecutions. This judgment is poised to have a significant impact on the enforcement landscape concerning large loan defaults and financial fraud in India.
2.3
Key take aways from NBFC Credit Growth and Outlook by ICRA
- Total NBFC credit stood at Rs 52 trillion as of Dec. 24; expected to exceed Rs 60 trillion by FY26.
- Credit growth projected to ease to 13–15% in FY25 and FY26 from 17% in the past two fiscals.
- Retail assets comprised 58% of NBFC credit as of Dec. 24 growing at a CAGR of 23% during FY24. Expected to slow to 16-18% in FY26
- Rising stress in microfinance, personal loans, credit cards, and unsecured business loans in FY2025.
- Unsecured business loans constituted 28% of retail NBFC credit (Dec 2024).
- Elevated delinquencies and write-offs observed, particularly in unsecured segments.
- Competitive pressures remain high, impacting margins despite lower cost of funds.
- Return on Average Managed Assets (RoMA) expected to decline by 30–50 bps in FY26 versus FY2024.
- Non-HFC NBFCs to face profitability headwinds; HFCs’ performance remains relatively stable, though credit costs are monitorable.
This is in alignment with the projection that banks may experience margin compression in FY26 due to rising delinquencies in retail and unsecured lending. While bank credit growth is expected at 11%, asset quality challenges are likely to affect net interest margins, especially in smaller-ticket loans.
# 3 SEBI
3.1 SEBI in its discussion paper released last week proposes to revamp the Online Dispute Resolution [ODR] framework for the securities market. Key highlights
- Coverage is now extended to depositories.
- For disputes over ₹10 crore or with defects direct arbitration proposed.
- Mandatory Deposit of full award amount required for court appeals.
- Neutral Dispute Assignment proposed through round-robin system to avoid bias.
- 21 working days for conciliation, then online arbitration.
- Digital Processes proposed through E-filings, video hearings, and quick award deadlines.
While the proposals aim to speed up dispute resolution through strict timelines, digital filings, key concerns include the financial burden on retail investors due to the mandatory deposit rule, complexities in assessing depository-related disputes, potential jurisdictional confusion between contractual and regulatory disputes, and risks of conflict of interest without independent panel selection
3.2 SEBI has standardised disclosures in the draft scheme offer documents for small and medium REITs. Changes include revised structure in offer documents, updated framework for ESG rating providers and credit rating regulations.
- Key Information of the Trust (KIT) to contain details about the SM REIT, investment manager, trustee, and trust structure.
- Key Information of the Scheme (KIS) to provides scheme-specific details, including asset information.
- For subscriber-pays models, ESG Rating Providers [ERPs] must share ESG rating reports with both subscribers and the rated entity simultaneously. The disclosure policy regarding this sharing must be made public.
- Rules modified to enhance transparency and clarity regarding rating practices.
The proposed changes would facilitate ease of doing business for small and medium real estate investment trust (SM Reits).
3.3 NSE has revised eligibility criteria for SMEs to migrate to Main Board
- SMEs must be listed on the SME platform for at least three years before applying for main board migration.
- Companies must have a minimum paid-up equity capital of ₹10 crore.
- Must have posted revenue from operations exceeding ₹100 crore in the last financial year.
- Must report positive operating profit in at least two of the past three financial years and have a minimum net worth of ₹75 crore.
- Must have at least 500 public shareholders as of the application date.
- Promoters/promoter groups must hold at least 20% at the time of application.
- Promoters must retain at least 50% of shares held at the time of initial SME listing during migration.
- No material regulatory actions like SEBI debarments or trading suspensions in the past three years, no admitted petitions by NCLT or proceedings under IBC.
The revised norms aim to allow only mature, compliant, and fundamentally strong SMEs to migrate, thereby enhancing investor confidence and market discipline.
# 4 Insurance
4.1 Key highlights from report on India’s Non-Life Insurance Industry by Care Ratings
- Growth moderated despite surpassing the ₹3 lakh crore mark, impacted by Implementation of the 1/n rule (daily premium recognition), weak passenger vehicle sales and continued weakness in commercial insurance lines.
- In Public Sector General Insurers, Gross direct premium grew 5.5% YoY in March 2025, led by retail health; commercial lines remained weak, while in private sector growth slowed sharply recording decline in March 2025.
- Growth moderated to 11.1% YoY in March 2025 vs. previous years in Standalone Health Insurers [SAHIs] while maintaining market share gains despite overall slowdown.
- Private non-life insurers’ market share rose to 65.4% in FY25 (from 61% in FY23) while health insurance market share increased from 35.3% (FY23) to 38.6% (FY25).
- Group Health remained the largest segment but saw slower growth while Government health scheme participation declined.
While non-life insurance industry growth fell to single digits due to pricing pressures, regulatory changes, it is a matter of concern that nearly 50% of Indians are under insured with health cover below Rs. 5 lakhs. While digital platforms and tax incentives have improved accessibility, awareness and affordability remain key barriers, especially in tier-2 and rural regions.
4.2 The IRDAI is considering a proposal to allow insurance repositories to manage claims processing. This could create a digital infrastructure for faster settlements, improve transparency, and reduce insurer workload by integrating claims into e-insurance accounts (eIAs).
# 5 Economy
5.1 As per HSBC Flash report released last week
- The Composite PMI rose to 60 in April (from 59.5 in March)
- Services PMI rose to 59.1 from 58.5
- Manufacturing PMI output rose to 61.9 from 61.7 with both services (59.1) and manufacturing (58.4) accelerating.
- Broader Manufacturing PMI expected to rise to 58.4 from 58.1
Strong global demand, a tariff pause, and robust sales boosted output, employment, and margins causing the buoyancy of 8 month high. The index has now remained in growth territory for over three years signalling resilient external demand and improving manufacturing momentum despite global headwinds.
5.2 As per World Bank report released last week
- India lifted 170 million people out of poverty between 2011-12 and 2022-23, reducing extreme poverty to 2.3% from 16.2%.
- Rural poverty fell faster than urban poverty.
- Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh who accounted for 65% of India’s extreme poor in 2011-12 were also responsible for two-third of the poverty reduction by 2022-23 and now represent 54% of those living in extreme poverty.
- India’s Gini Index, which measures consumption-based inequality, fell to 25.5 in 2022-23 from 28.8 in 2011-12, marking an improvement.
- However, income inequality rose sharply, with top earners making 13 times more than the bottom 10%.
While the data limitations continue to challenge the presumptions and assumptions, it is clear that there is commendable reduction of poverty viewed with any lens.
5.3 Key highlights from reports published by IMF and World Bank last week.
- Global Growth Outlook (IMF WEO April 2025):
- Global economy is not headed for a recession; growth projected at 2.8% in 2025 and 3% in 2026, both revised down from January estimates.
- Global trade growth revised sharply downward to 1.7% in 2025, as re-routing of trade flows becomes harder.
- India’s growth forecast lowered to 6.2% (0.3 points down from January).
- US growth forecast cut to 1.8% (almost 1 point lower), with 0.4 points attributed to recent tariff hikes and rising policy uncertainty.
- US effective tariff rates now exceed Great Depression levels, raising global barriers and policy unpredictability.
- IMF warns of a structural reset of the global economic system after 80 years of relative openness.
- India’s Growth Outlook (World Bank April 2025):
- World Bank lowered India’s FY25 growth forecast from 6.7% to 6.3%, citing weaker private investment and public capex.
- FY26 growth forecast also at 6.3%, with gains from monetary easing offset by global weakness and policy risks.
- Private consumption to benefit from tax cuts; government investment to improve, but export demand to stay weak.
5.4 As per outlook report released by World Trade Organisation [WTO]
- Global merchandise trade to contract by 0.2% in 2025, reversing earlier growth projections (~3%).
- North America will subtract the most from global trade (-1.7 percentage points), with U.S. exports projected to fall 12.6% and imports by 9.6%.
- Asia and Europe will still grow trade marginally, but sharply below earlier expectations; China’s exports to U.S. could collapse by 77%.
- Least Developed Countries’ exports may grow 4.8%, benefiting from trade diversion.
- Global services trade is forecast to slow to 4% growth, led by declines in transport and travel services.
- Trade Policy Uncertainty (TPU) alone accounts for one-sixth of the projected trade contraction.
5.5 Key takeaways from State of Economy published in RBI bulletin last week:
- India’s external vulnerability is low, with an external debt-to-GDP ratio of 19% and foreign exchange reserves covering approximately 11 months of imports.
- The agricultural sector benefits from a forecast of an above-normal southwest monsoon in 2025, which is expected to enhance incomes and stabilize food prices.
- Domestic air passenger traffic increased by 15% year-on-year, reflecting recovery in travel demand.
- There were slight declines in commercial vehicle sales, reflecting broader economic challenges with sales down by 3.8% and an uptick in freight traffic.
- In manufacturing, capacity utilization rose by 120 basis points, indicating positive outlooks for growth.
Overall, while the global outlook remains fraught with uncertainties due to trade tensions, India’s economy is demonstrating resilience through robust domestic markets, with macroeconomic stability and low inflation positioning it favourably for sustained growth.
5.6 As per data released last week,
- India’s core sector output grew 3.8% YoY in March 2025 (vs. 6.3% in March 2024), highest in two months.
- Growth was led by cement (+11.6%), steel (+7.1%), and electricity (+6.2%).
- Only 3 of 8 industries posted monthly production gains; others, including fertilizers, refinery products, coal, natural gas, and crude oil, saw declines.
- Overall industrial production growth slowed to 2.9% in February 2025, a six-month low.
# 6 PE/VC
6.1 As per data released by Tracxn last week,
- Startups raised around $848.3 million (86 rounds) in funding in April ‘25
- 5% lower than what was in March 2025 at $2.13 billion (82 rounds)
- 2% lower than what was in April 2024 at $ 1.1 billion (116 rounds) to the same period last year
- Funding for Indian direct-to-consumer (D2C) startups fell 18% in 2024 from $930 million in 2023 to $757 million in 2024 with no of deals falling from 321 to 257. No new unicorns emerged in 2024.