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Informist, Friday, Mar. 28, 2025

By Gopika Balasubramanium

MUMBAI – Benchmark indices closed lower Friday after a volatile session, marking the close of the financial year 2024-25 (Apr-Mar). Despite the underlying trend being positive, the indices fell largely because investors booked profits and braced themselves for the outcome of US President Donald Trump's tariff decision on Apr. 2. Laggards Infosys and Reliance Industries weighed on the indices, despite sharp gains in ICICI Bank and HDFC Bank.

Selling pressure was visible across other Asian markets and Europe as well. The negative sentiment in global markets continued from Thursday after Trump, late Wednesday, announced a 25% tariff on automobiles and auto-part imports. However, Indian equities had shown some resilience and managed to end higher Thursday, unlike some of their Asian and European peers, thanks to the buying by foreign investors, especially in banking and financial services stocks.

On Friday, the benchmark indices remained subdued in a thin range for most of the session. The mid- and small-cap indices mirrored the fall in benchmark peers. The Nifty 50 closed at 23519.35 points, down 0.3%, and the BSE Sensex closed at 77414.92 points, down 0.3%, on the last trading session of FY25.

In FY25, the Nifty 50 rose 5.8% and the BSE Sensex rose 5.6%, indicating that good days for investors were handful in the year. However, growth was stronger in other markets, particularly in Asia, with Hong Kong's Hang Seng gaining nearly 42%, followed by FTSE Singapore Strait Times which posted a growth of over 23%. If we were to compare growth of Indian equities with that of US, the Street would be in for a disappointment as S&P 500 grew 8.5% and Dow Jones Industrial Average grew over 6% in the same period.

The slower pace of growth in Indian equities this year was largely attributed to the high base of FY24. The benchmark indices had posted double digit growth of 24-28% in FY24. Post which, there were many challenges in the domestic market, such as expensive valuations, heavy selling by foreign investors, and a slowdown in corporate earnings growth. Foreign portfolio investors had turned bearish towards Indian equities, kicking off a major sell-off since September. They net-sold equities worth INR 940 billion in October alone. One reason for this was the prospect of an improvement in the US market post Trump's return to the White House, which was expected to lead to higher returns and stronger corporate earnings growth.

Earnings of domestic companies were disappointing in FY25, mainly due to lower-than-expected government spending, high inflation and slowdown in economic growth which delayed rate cuts by the Reserve Bank of India, and tight liquidity conditions in the banking system which left no room for lenders to push credit growth. Earnings were also affected due to muted demand in urban and rural areas in FY25. Due to this, many fast-moving consumer goods and automobile companies posted muted earnings. However, rural demand has shown some signs of growth post November. Meanwhile, several banks and financial services companies bore the brunt of increasing bad loans, especially in the microfinance segment.

In FY25, Bharat Electronics gained nearly 50%, mainly driven by increased defence spending. Bharti Airtel gained over 41%, as the telecommunication company had the highest average revenue per user among peers. On the other hand, IndusInd Bank was the worst performer in FY25, mainly due to the recent near-29% fall after the bank disclosed discrepancies in its foreign exchange derivatives segment. Jio Financial Services and Tata Motors declined 32-35%

FY26 will fare better than FY25, in terms of earnings growth and improvement in demand, the head of research at a domestic brokerage said. The demand scenario that was muted in the near-term is likely to pick up in the coming financial year, he said. The measures by the government and the Reserve Bank of India will likely induce overall growth, which will have a positive impact on the earnings of companies, he said.

STOCK ACTION

Jio Financial Services and Zomato debuted as Nifty 50 stocks on Friday. Shares of Jio Financial Services gave up some of the gains and ended 0.8% higher, while those of Zomato ended 2.2% lower. Bharat Petroleum Corp. and Britannia Industries, which were excluded from the index, closed higher.

Most information technology stocks in the 50-stock index closed lower. Wipro was the worst-hit, closing down 3.7%. Shares of HCL Technologies, Infosys, and Tata Consultancy Services fell 1.2-2.3% lower. Weakness in these stocks was mainly due to the anticipation of a cut in IT spending in the US amid likely slowdown in the country's economy caused by Trump's trade policies, analysts said.

Similarly, automobile stocks such as Mahindra & Mahindra, Maruti Suzuki India, Hero MotoCorp, and Bajaj Auto declined. M&M closed 2.5% lower. Chinese electric carmaker BYD coming into India poses a huge risk to dominant electric vehicle players, especially M&M and Tata Motors, Saral Seth, vice president – research at IndSec Securities, said. Some impact will be there on other domestic car-makers such as Maruti Suzuki India as well, he said. Maruti Suzuki recently launched its electric vehicle E-Vitara.

BSE was in focus as the stock gained 17% after the Securities and Exchange Board of India proposed that exchanges keep either Tuesday or Thursday as the expiry day for all equity derivatives contracts. Currently, derivatives contracts of the National Stock Exchange expire on Thursday and those of BSE expire on Tuesday. BSE's share price had fallen sharply recently after its non-listed peer announced that it will move its derivatives expiry to Monday from Thursday, effective Apr. 1. If the day of expiry on NSE had shifted to Monday, traders would have shifted to its contracts, leading to loss of market share for BSE, analysts said. Moreover, NSE's plan to launch an initial public offering remains on hold as SEBI has highlighted several deficiencies.

* Of the Nifty 50 stocks, 22 rose and 28 fell 

* Of the Sensex stocks, 12 rose and 18 fell

* On the NSE, 1,099 stocks rose, 1,807 fell, and 70 were unchanged

* On the BSE, 1,497 stocks rose, 2,499 fell, and 123 were unchanged

* Nifty Media: down 2.3%; Nifty IT: down 1.8%; Nifty FMCG: up 0.6%

BSE                                               NSE

Sensex: 77414.92, down 191.51 points or 0.3%      Nifty 50: 23519.35, down 72.60 points or 0.3%

End

Edited by Ashish Shirke

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