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Equity markets after five consecutive months of decline, bounced back smartly in Mar’25, on the back improving domestic macros, FII buying and short covering in F&O space. Nifty gained 6.3% MoM – it’s highest monthly gains since Jul’24. The broader market outperformed with Nifty Midcap 100 rising by +7.8% and Smallcap 100 jumping 9.5%. India’s retail inflation eased to seven-month low of 3.61% in Feb’25, down from 4.31% in Jan’25. The industrial output (IIP) growth was above expectation at 5% YoY in Jan’25 against 3.2% in December. FIIs turned marginal buyers in Mar’25, Rs 2,014 crore in the secondary market – after 5 consecutive months of outflows. DII inflows remained positive at Rs 37,586 crore.

In the much-awaited event – US President Donald Trump announced reciprocal tariff on imports from 185 countries on 2 ^nd April – escalating trade tensions and fears of an economic slowdown. US Dow fell over 9% over the next 2 days post this announcement, spiralling into a sell-off in global equites. Nifty corrected by ~15% so far (till 9 ^th April) from its peak in the last 6 months. This correction is mainly attributed to modest 9MFY25 earnings growth (Nifty EPS grew 4% in 9M), continuous FII selling since Oct’24 and a challenging global backdrop. While 4QFY25 is likely be another weak quarter, expectations for FY26 earnings are still elevated and could see downgrades, in our opinion. We estimate Nifty-50 earnings to grow 2% YoY in 4QFY25 . Overall, we expect Nifty earnings to grow by 5% in FY25 and 14% in FY26 to ?1,017/Rs 1,157. We remain biased toward large-caps in this volatile environment. On sectoral front, we are positive on Financials, Domestic Consumption including travel, hospitality, durables, Industrials and suggest avoiding globally exposed sectors like IT, pharma, metals.

Price performance of holdings in MOSt Signature

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