# 1 Markets
Indian equities posted their third consecutive weekly gain—marking the longest winning streak since December 2024. However, profit booking on Friday reversed early gains, leading to a modest pullback. The Nifty and Sensex ended the week at 24,347 and 80,502 respectively. A key structural shift was observed in market ownership: Domestic Institutional Investors (DIIs) now hold a 17.62% stake in NSE-listed companies, overtaking Foreign Portfolio Investors (FPIs) at 17.22%—the first time in over 22 years.
Meanwhile, FPI outflows from Indian bonds surged in April, with a net selloff of ₹13,359 crore—the highest monthly outflow since the announcement of India’s inclusion in global bond indices. The selloff reflects the narrowing yield differential with U.S. bonds. Indian 10-year G-sec yields eased to 6.35%, aided by RBI buybacks, even as U.S. 10-year Treasuries hardened by 10 bps to 4.30%. The newly issued benchmark G-sec closed at 6.32% on Friday.
In the U.S., macroeconomic data pointed to a slowdown: Q1 GDP contracted 0.3% (QoQ, annualized), ISM Manufacturing PMI fell to 48.7 in April, indicating a second consecutive month of contraction, Jobless claims rose to 241,000. Despite this, U.S. equity indices ended the week higher—especially on Friday—buoyed by hopes of easing trade tensions with China and a stronger-than-expected jobs report, overshadowing broader concerns about economic weakness.
# 2 RBI
2.1 As part of initiative since 2005, driven by “One State one RRB” principle, fourth phase of amalgamation of 26 Regional Rural Banks across 11 states and Union territories was carried out last week. Post-amalgamation, there will be 28 RRBs covering 700 districts, primarily serving rural areas.
- Prior to amalgamation, there were 196 RRBs (as of 2005), each operating with limited scale, often overlapping in geographical coverage, and facing viability challenges.
- Impact includes operational efficiency and economies of scale through branch rationalisation, resource optimisation, technology standardisation and overall reduction in operational costs.
- As per NABARD data, post amalgamation RRBs have reported better profitability metrics with lower NPAS and improved business per employee.
Despite challenges on cultural integration, challenges in reassigning redundant staff roles etc., amalgamation is well intended initiative to improve the effectiveness in functioning of RRBs.
2.2 Introduction of Bond forwards in G.Secs from May 2, 2025, is considered significant after publication of its guidelines in April 2024. These instruments are useful for hedging interest rate risk, especially for institutional investors like banks, mutual funds, and insurance companies. Until recently, India’s bond market lacked access to this key risk management tool.
Positive Impact:
- Enhances the depth of India’s G-Sec market
- Encourages institutional participation, especially foreign portfolio investors (FPIs), who often seek advanced risk tools before entering EM bond markets.
- Improves price discovery in both spot and forward bond markets, making yields more reflective of future expectations.
- Enables better Asset-Liability Management (ALM) for banks and insurers by hedging interest rate risk on their long-duration bond portfolios.
- Mutual funds, especially debt funds with duration exposure, can lock in future bond prices and manage mark-to-market risks more efficiently.
The introduction of bond forwards marks a significant development in India’s fixed income market architecture. It closes a critical gap in the derivative landscape by providing a cash-settled, term-specific hedge for government bond exposures. However, its success will depend on ecosystem readiness, regulatory parity with other derivatives, and active market-making by banks and primary dealers. Limitations include non-availability for SDLs and potential cannibalization of already thin IRF volumes.
2.3 As per report released by ICRA last week, loans worth ₹21,800 crore lent to high-risk MSMEs and mid-corporates are at potential risk, driven by worsening operating conditions amid the escalating global tariff war. Key findings include:
- Total high-risk debt at risk: ₹21,800 cr. – MSMEs: ₹8,100 cr.; Mid-corporates: ₹13,700 cr.
- High Risk through – Interest coverage ratio < 1.1x and Leverage > 5x
- Of 16% of total MSME debt tracked 6% at high risk MSMEs
- Of 11% of mid corporates tracked 5% are at high risk
- 50% of MSMEs have Return on Equity [RoE] < 5% hampered by working capital constraints and limited access to low-cost finance
- Tariff war & global slowdown exacerbating credit stress and limiting capex appetite, thus threatening both demand and profitability.
It is clear that interest subvention and Credit linked Capital Subsidy scheme have only modestly improved MSME capex in the past 3 years as they are disproportionately vulnerable to macroeconomic shocks, especially amid trade tensions and weak global demand. While mid-corporates retain stronger buffers, MSMEs need targeted financial relief and structural reforms to sustain investment and reduce default risks.
2.4 As per RBI data published last week
- Bank credit growth decelerated to 12% in FY25, down from 16% in FY24, impacted by regulatory curbs on retail and unsecured loans and base effect,
- Industry: Credit growth remained flat at 8% YoY, with segments like petroleum, metals, engineering, and construction seeing healthy growth
- Retail credit: Growth moderated to 14% YoY from 17.6%, mainly due to a slowdown in vehicle loans, credit cards, and personal loans.
- Services: Growth fell to 13.4% YoY from 20.8%, largely due to reduced lending to NBFCs. However, professional services and trade continued to see robust credit growth.
- Agriculture: Slowed significantly to 10.4% YoY from 20%, reflecting broader economic stress and base normalization.
- Gold loans doubled while credit to RE sector rose 79% YoY.
But in the current FY till April 2025,
- Bank lending contracted by 0.3% compared to growth of 0.4% in same period last year
- In absolute terms, lending contracted by Rs 57,213 crore in April 25 compared to a growth of Rs 59,632 crore in the same period a year ago.
It is clear that banks still have to start business on an aggressive note in the current fiscal.
# 3 SEBI
3.1 SEBI on Wednesday, proposed to mandate that select shareholders, including directors, key managerial personnel and current employees will have to hold shares in demat form before the company files for an initial public offering (IPO).
- Currently, only promoters are required to hold shares in demat form before an IPO. The proposal extends this requirement to include all directors, selling shareholders, KMPs etc.
- SEBI aims to eliminate inefficiencies and risks associated with physical share certificates
Though this has cost implications and regulatory compliance issues across diverse shareholder categories, this is a welcome move as it enhances transparency and security besides enhancing market integrity and operational efficiency.
3.2 SEBI has extended
- the implementation timeline for the optional T+0 (same day) equity settlement cycle for Qualified Stockbrokers (QSBs) to 1 November 2025, from the earlier 1 May deadline.
- The plan to shift to an optional T+0 settlement system started as a pilot project with 25 shares available for trading under this, with a provision to extend it to the top 500 scrips in terms of market capitalisation as on December 31, 2024. There were as many as 11 QSBs in the Indian stock market as per a March 2024 circular.
This was considered ambitious even at the time of launch as nowhere in the World this has been tried. QSBs are mandated to upgrade systems to facilitate investor participation in this optional cycle. Many top brokers were unprepared due to system limitations especially for FPIs. We are doubtful whether this will be done even in Nov 2025. Let’s wait and watch.
3.3 The Supreme Court of India in a landmark judgement, has invalidated JSW Steel’s ₹19,700 crore acquisition of Bhushan Power & Steel Ltd (BPSL), deeming the resolution plan “illegal” and ordering the company’s liquidation. This verdict, delivered on May 2, 2025, overturns approvals previously granted by the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). Key reasons include
- Non-Compliance with IBC Provisions as the plan’s funding structure included optionally convertible debentures (OCDs) alongside equity, whereas the IBC mandates an all-equity infusion for such resolutions
- Delayed Implementation by approximately two years.
- The resolution professional and the Committee of Creditors (CoC) were criticized for having approved the resolution plan without proper application of commercial wisdom and failed to protect creditors’ interests
Implications for JSW:
- Analysts estimate that JSW Steel could face a reduction of ₹4,000–4,500 crore EBITDA for FY26. BPSL accounted for over 13% of JSW Steel’s production capacity and approximately 10% of its EBITDA.
- JSW Steel may need to write off its ₹19,700 crore investment in BPSL.
- The invalidation of this acquisition disrupts the company’s plans to increase its domestic production capacity to 50 million tonnes by 2030
Implications for others:
- The liquidation process typically yields lower recoveries compared to resolution plans, potentially affecting SBI and PNB, major creditors to BPSL.
- The Supreme Court’s decision raises concerns about the finality and predictability of the insolvency resolution process under the IBC. This could deter both domestic and foreign investors from participating in future resolutions of distressed assets, fearing legal uncertainties
This landmark judgment reversing a closed approval 3 years ago, is poised to have significant implications for India’s insolvency resolution framework, potentially influencing legislative reforms and the conduct of stakeholders in future insolvency process.
# 4 Economy
4.1 India’s Industrial Output (March 2025 & FY25)
- March 2025 IIP Growth: Rose to 3% (vs. 2.7% in February), showing mild recovery from a six-month low.
- FY25 Industrial Growth: Stood at 4%, the weakest in 4 years, down from 5.9% in FY24.
- Sector-wise Trends:
- Consumer Durables: Strong at 7.9% annually, 6.6% in March.
- Consumer Non-durables: Declined 1.6% in FY25, fell 4.7% in March (4th straight monthly drop).
- Infrastructure Goods: Up 6.6%, Capital Goods up 5.5%.
- Electricity: Grew 6.3% in March; Manufacturing: +3%; Mining: Sluggish at 0.4%.
Industrial recovery may hinge on private investment and consumption rebound, though export performance faces risks from evolving global trade policies.
4.2 S&P Global rating last Friday,
- Lowered India’s economic growth forecast to 6.3% in FY26 from 6.5% projected earlier, on the back of deepening uncertainty due to the tariffs imposed by the US.
- The forecast is lower than the RBI projection of 6.5%.
- IMF also cut India’s growth forecast to 6.2% from 6.5% for FY26, while the World Bank forecasts a 6.3% growth compared with 6.5% earlier
- China’s gross domestic product (GDP) growth will slow to 3.5% in 2025 from 4.1% projected in March baseline, according to the ratings agency
The agency’s revised outlook assumes a 10% tariff on imports to the US, but not country-specific tariffs; 25% duties on autos, steel, aluminium, pharmaceuticals, and semiconductors; and 145% tariff on Chinese imports to the US and 125% on US goods going to China. It is no consolation that China’s growth forecast is also lowered to 3.5% from 4.1%.
4.3 As per data released by RBI last Friday, India’s Exports Reach All-Time High in FY2024–25: Key Highlights
- Total Exports: Rose 6.01% YoY to a record $824.9 billion, up from $778.1 billion in FY24.
- Services Exports: Grew 13.6% YoY to an all-time high of $387.5 billion; March alone saw a surge of 18.6% to $35.6 billion, led by IT, business, financial, and travel services.
- Non-petroleum Goods Exports: Increased 6% YoY to a record $374.1 billion, despite broader global demand pressures.
- Merchandise Exports: Marginally up at $437.42 billion (vs $437.07 billion in FY24); Imports rose to $720.24 billion (vs $678.21 billion), widening the trade deficit.
- March Trade Deficit: Widened to $21.54 billion, from $14.05 billion in February.
- India–US Trade: Surplus widened 16.6% YoY to $41.18 billion; Exports to US rose 11.6% to $86.51 billion, while imports grew 7.42% to $45.33 billion.
Strong performance driven by high-value services, value-added manufacturing, better logistics, and schemes like PLI points to a shift in export composition. This boosts India’s positioning in FTA negotiations (EU, UK), and underscores a pivot to service-driven export resilience amid global headwinds
4.4 As per S&P Global release last week,
- The HSBC India Manufacturing Purchasing Managers’ Index (PMI), rose to 58.2 in April from 58.1 in March and 56.3 in February. PMI was at 57.7 in January and 56.4 in December. A reading above 50 indicates expansion, and below 50 a contraction.
- Total sales were supported by the second fastest upturn in international orders since March 2011.
- Growth momentum improved with output increasing at the fastest pace since June 2024 on the back of another strong expansion in order books
- This positive trend was accompanied by notable rises in employment and purchasing activity
India’s manufacturing sector expanded at its fastest pace in 10 months in April, driven by strong demand and a sharp rise in output. It should be noted that the recent strengthening in the two PMI surveys appears to have been driven predominantly by export front-running ahead of potentially more punitive US tariffs. That means these flows are fundamentally unsustainable and prone to an eventual sharp correction.
# 5 PE VC
5.1 NASSCOM’s “Patent Pulse 2025” position India among the top 5 globally for AI innovation
- Over 86,000 AI-related patents filed in India since 2010,
- AI constituting 25% of all tech patents and Generative AI accounting for 28% of AI filings
- PE-VC investments in India reached $11.8 bn during Jan–Apr 2025, up 27% YoY from $9.3 bn, with April alone accounting for $2.7 bn, driven by deals in technology, healthcare, and renewables, reflecting strong LP confidence despite macro uncertainty
- Growth-stage VC activity tripled in Q1 2025 versus Q1 2024, with total deal value more than tripling (though still below 2021 peaks) and median deal size rising to $50 m—indicating cautious yet improving capital deployment at Series D+ rounds
- Total Startup Funding in April 2025 stood at $745 million across 116 deals — down 34.65% MoM from March ($1.14 billion) and the lowest April funding in five years.
- Growth & Late-Stage: $562 million from 23 deals.
- Early-Stage: $186 million across 77 deals.
- Undisclosed Rounds: 16.
- Fewer large-ticket deals, with investor attention shifting to early and mid-stage startups — potential “unicorns of tomorrow.”
Despite near-term softness and global disruptions, signs point to a potential rebound in H2 2025, supported by resilient new-age startups and seasoned founders.