Week ending 8th March 2025
# 1 Markets
1.1 Indian stock markets are showing early signs of recovery, supported by a combination of favourable macroeconomic factors. Easing crude oil prices (around $70 per barrel), a decline in US bond yields, and a correction in the dollar index (below 104) have collectively boosted investor sentiment. In a strong weekly performance, the Nifty closed at 22,544, while the Sensex ended at 74,340, marking the highest weekly gains in 2025. With Nifty rebounding nearly 650 points from recent lows, the key question remains—where will this rally find resistance? However, continued uncertainty surrounding the US President’s shifting tariff policies is likely to keep markets volatile in the near term.
1.2 Concerns over slower economic growth and stabilizing inflation have raised expectations of another rate cut in April. This optimism led to a softening of bond yields, with the 10-year benchmark yield closing at 6.68% on Friday.
1.3 US stock markets witnessed a decline, primarily driven by a downturn in chip stocks amid slowing demand for AI infrastructure. Trade war concerns added to the uncertainty, weighing down sentiment. All the three major Wall Street indices ended lower last Friday, reflecting continued unease around tariff developments and broader market trends.
1.4 US bond yields, which had been showing signs of softening, reversed course last week due to heightened inflation fears and expectations of higher interest rates. The 10-year US Treasury yield closed higher at 4.30% on Friday. Meanwhile, in Europe, the ECB implemented a 25-basis-point rate cut, reducing marginal lending rates, signaling a shift in policy to support economic stability.
# 2 RBI
2.1 As per latest data released by RBI
- Credit growth continued to outpace deposit growth even as both have slowed over previous years
- Outstanding bank deposits amounted to ₹222 lakh crore as of February 21, up 3 % year-on-year compared to 13.1 % in the same period a year ago
- Outstanding bank credit on the other hand amounted to ₹179.9 lakh crore as of February 21, up 11% y-o-y compared to 20.5% growth in the same period a year ago.
- The YoY slowdown in credit offtake is due to reduced lending to NBFCs, which dropped from 15.6% in January 2023 to 7.7% in January 2024
- Overall retail loans which were driving the banking sector’s loan book since Covid-19 in 2020, has grown more than half the pace of previous year at 11 .8 % YoY in January 2024 compared to 28.6 % growth in January 2023.Gold loan rose 77% y-o-y vs 17%.
- But lending to large industry rose 6.4 % compared to 5.7 % a year ago and medium firms rose 18.5 % compared to 10 % a year ago.
- Credit deposit [CD] ratio, which was seen easing, is now moving up again and stood at 79.1% as of February 21.
This increase in CD ratio can be attributed to increasing term deposits driven by rising interest rates and slower CASA growth. Since November 2023, tightening of prudential norms through higher risk weights has impacted banking lending to segments like loans to NBFCs, unsecured lending and credit card outstanding. Additionally, the stress in unsecured retail lending and microfinance segments has affected overall credit growth in the banking sector according to Care Ratings.
2.2 Govt. last Thursday launched a new credit assessment model for micro, medium and small enterprises (MSMEs)
- The model-based limit assessment will be for both ‘existing to bank’ and ‘new to bank’ MSME borrowers and will use objective decisioning for all loan applications.
- The new model based on digital footprints is expected to be a significant improvement over the traditional assessment of credit eligibility based only on asset or turnover criteria.
- The model is expected to leverage the digitally fetched and verifiable data available in the ecosystem and thus cover MSME without formal accounting system and devise automated journeys for MSME loan appraisal.
- The digital footprints include Name and Pan authentication using NSDL, Mobile and email verification using OTP, API fetch of GST data through service providers, Bank Statement Analysis using account aggregator, ITR upload and verification, API enabled commercial and consumer bureau fetch and due diligence using CICs, fraud checks.
The use of this online model is expected to reduce turnaround time without physical collateral securities for loans covered under Credit Guarantee Fund Trust for Micro and Small Enterprises. Information asymmetry is huge in the MSME space, and it is a big challenge to standardise the template for assessment applying available digital footprints without uniform behaviour entirely replacing human visits and assessments.
It is to be seen how PSBs effectively make use of this model while most of the fintech’s are already using most of these tools in partnership with banks.
# SEBI
3.1 SEBI has introduced stricter Key Performance Indicator (KPI) disclosure requirements for IPOs to enhance transparency and provide investors with a clearer understanding of company valuations and performance. Some of the key aspects include:
- Companies must provide unambiguous definitions and include non-traditional financial metrics relevant to valuation. Non-financial operational measures to be included in the “basis for offer price” section.
- All KPIs must be approved by the issuer’s audit committee before being included in the offer document. The KPIs in the offer document to be certified by a professional.
- Companies must disclose key information shared with investors in any primary issuance within the past three years, excluding ESOPs, including details from secondary sales and private placements. KPIs to be periodically disclosed till issue proceeds are fully utilised.
The guidelines improve peer comparison and investor confidence, though ambiguity remains on global peer disclosures. However, enhanced audit scrutiny may slow IPO preparations but ensures retail investors receive the same KPI data as institutional investors, promoting fairer assessments.
3.2 SEBI last Monday extended the deadline by a month to March-end for reporting differential rights issues by Alternative Investment Funds (AIFs).
- A one-time reporting requirement was set for AIFs that filed their Private Placement Memorandum (PPM) with SEBI on or after March 1, 2020, and issued differential rights outside the standard guidelines. This report was initially due by February 28, 2025.
- SEBI in December 2024, laid out guidelines for AIFs offering differential rights to certain investors like Govt. backed Funds.
- Differential rights were also permitted depending on different class of unit’s basis the amount of contribution as long as this does not impact the distribution to other investors.
- Broadly, AIFs to grant investors’ rights in investment and distribution of proceeds in proportion to their commitments in a scheme.
SEBI was not comfortable with offering differential rights to same set of investors unless they are different in terms of their extent of contribution / commitments grouped by a separate class of units. Different class of units are thus permissible carrying a different fee, carry etc., as long as this does not impact the benefits flowing to other investors. This was aimed ensuring fair and equal treatment of investors of an AIF.
3.3 SEBI last Friday proposed
- to cut the minimum application size for public issuance of Zero Coupon Zero Principal instruments issued by non-profit organisations on Social Stock Exchange (SSE) to either Rs 5,000 or Rs 1,000 from the existing Rs 10,000.
- Zero-coupon, zero-principal (ZCZP) are instruments for donating money to non-profit organisations (NPOs) listed on the SSE.
The move, if implemented, would boost the retail participation in ZCZP issuances by NPOs.
3.4 SEBI last Monday has proposed
- To treat offshore derivative instruments (ODI) and segregated portfolios of FPI on par with FPIs in terms of regulation.
- Norms for violations and caps on the instruments used in FPIs use to issue ODI.
- P-Notes or offshore derivative instruments (ODIs) so far had more relaxed regulations compared with other FPIs, making it relatively easier for financial irregularities and frauds.
Since the difference and arbitrage has been plugged FPIs may not be able to derive advantage using offshore derivative instruments.
# 4 Economy
4.1 As per CRISIL India Outlook report released last Thursday,
- India’s economy is set to grow at a steady 6.5% in fiscal 2026, driven by strong domestic demand, despite global headwinds, including geopolitical uncertainties and US-led trade actions
- Projection assumes a normal monsoon and stable commodity prices with key drivers including cooling food inflation, tax benefits announced in the budget and lower borrowing costs, which are expected to boost consumption.
- CRISIL expects India’s manufacturing sector to grow at an average of 9% per year between FY25 and FY31, up from 6% in the pre-pandemic decade.
- Manufacturing’s share in the GDP is projected to rise to 20% by FY31, supported by investments and efficiency gains, with services remaining the primary growth engine, though at a slower pace.
4.2 As per HSBC India PMI release last week
- Composite Output Index increased to 58.8 due to services sector expansion.
- Services PMI rose to 59 in February from 56.5 in January, indicating strong expansion.
- Domestic and international demand boosted new orders, supporting output expansion.
- Global demand rose at its fastest pace in six months, driving sector growth.
- Business Sentiment: Positive but dipped to its lowest since August 2024.
- Manufacturing PMI dropped to 56.3 in February from 57.7 in January, indicating a slowdown.
- Sales & Output Growth declined to a 14-month low.
Local demand seems to have cooled, which led order books filling up with less vigour. On the brighter side, overseas demand seems to be holding up. Besides, despite the PMI fall, it remains well in expansion territory.
4.3 As per MCA data release
- Company incorporations increased for a second straight month in February with 17,682 new companies, including the local units of foreign ones, up 2.4% from a year earlier.
- Between April 2024 and February 2025, a total of 159,991 companies were incorporated, down 5.2% from a year before, the data showed. The registrations dropped in eight out of the first 11 months of FY25.
Increase in company incorporations, signal an improvement in investor optimism about the medium-term economic growth prospects.
4.4 As per Knight Frank Wealth Report 2025 released last week
- The number of Indian high-net-worth individuals (HNWIs) with assets exceeding $10 million rose by 6% in 2024 to 85,698 from 80,686 in the previous year,
- This figure is projected to reach 93,753 by 2028, reflecting India’s expanding wealth landscape.
- India’s billionaire population also grew significantly, reaching 191 in 2024, with 26 new billionaires added in the past year, compared to just seven in 2019.
- The collective wealth of Indian billionaires is estimated at $950 billion, ranking India third globally after the US ($5.7 trillion) and China ($1.34 trillion).
The report highlights India’s strong economic growth, rising investment opportunities, and evolving luxury market as key drivers of wealth creation, underscoring the country’s increasing role in global wealth accumulation.
# 5 PE VC
Key takeaways from the Bain Global Private Equity Report 2025
- Investments and exits rebounded in 2024 after two years of decline, with deal value increasing by 37% year-over-year and exit value rising by 34%
- However, fund-raising struggled, falling by 23%, driven by liquidity challenges among limited partners (LPs)
- Distributions to investors fell to 11% of net asset value (NAV), the lowest rate in over a decade.
- General partners (GPs) increasingly relied on creative liquidity mechanisms such as minority stakes, dividend recapitalizations, and NAV loans to address cash flow deficits.
- Generative AI is being operationalized across portfolio companies, with nearly 20% of firms reporting tangible ROI from AI initiatives.
- Technology remained the leading sector for buyout deals, accounting for 33% of deal value. Financial services and industrials also showed significant recovery, growing by 92% and 81%, respectively.
- LPs increasingly favoured larger, experienced funds with differentiated strategies, leaving smaller funds struggling
- Fee pressure is intensifying as private markets converge with public markets, while retail capital inflows demand lower cost structures.
- M&A activity within private equity is accelerating as firms seek scale advantages and geographic expansion opportunities.