By Research desk
April 2025 Review
The Indian stock market rebounded strongly in April 2025, ending the month on a positive note despite early volatility triggered by global tensions. Benchmark indices Nifty 50 and Sensex gained approximately 3.46% and 3.2% respectively, with Nifty closing at 24,335.95 and Sensex at 80,288.38. The broader markets outperformed, as the Nifty Midcap 100 and Smallcap 100 rose up to 4.7%, recovering impressively—over 15% and 17% respectively—from the April 7th lows.
The sharp crash early in the month, driven by U.S.-China trade tensions, led to a steep sell-off. However, the markets swiftly recovered, helped by easing global concerns, RBI’s 25 bps repo rate cut, strong Q4 earnings, and supportive domestic cues. Key rallies in mid to late April were fuelled by foreign fund inflows, short-covering, a weaker U.S. dollar, and sectoral strength in banking and autos. The banking sector, led by robust results from HDFC Bank and ICICI Bank, was a standout performer, with the Nifty Bank index gaining 6.83%.
Foreign Institutional Investors turned net buyers, investing over ₹34,000 crore during a sustained nine-day streak, while DIIs also added ₹28,228 crore. Sector-wise, besides banking, oil & gas, FMCG, auto, and realty posted solid gains, while IT and metals underperformed, declining 3% and 5.6% respectively. The Indian rupee appreciated by 1.2% against the USD, closing at ₹84.49, its strongest level since November 2024. Gold prices touched new highs, nearing ₹1 lakh per 10 grams, reflecting safe-haven demand.
Overall, April saw a sharp turnaround from early losses to a resilient recovery, backed by strong domestic fundamentals and improving global sentiment, setting a cautiously optimistic tone for May 2025.
Sectoral performance
April witnessed a shift in investor focus from global to domestic themes. The month began on a weak note due to global trade tensions but later recovered as India-centric sectors gained traction. The Reserve Bank’s supportive measures, coupled with strong earnings in specific areas, helped the market find its footing and post gains.
The banking and financial services sector led the rally, with Nifty Bank rising nearly 6.8% during the month. Solid quarterly earnings from private banks like HDFC Bank and ICICI Bank played a key role in driving sentiment. The RBI’s accommodative stance, including a repo rate cut and liquidity-boosting measures, further aided the momentum. Surplus liquidity and a favourable credit environment, particularly for NBFCs and MFIs, supported the sector’s performance. Nifty Bank even scaled fresh all-time highs during the month.
The oil and gas sector delivered strong gains of 4–6%, supported by favourable crude oil prices and a robust performance from index heavyweight Reliance Industries. The sector also offered attractive dividend yields, making it an appealing defensive play during volatile global conditions.
The FMCG sector extended its winning streak for a second consecutive month, rising 4–6%. With investors rotating into domestic consumption themes amid international uncertainty, FMCG stocks saw renewed interest. Seasonal tailwinds and strong technical indicators further supported the rally. While stocks like Tata Consumer and Nestle performed well, others like HUL saw pressure following muted earnings, and ITC underperformed.
The auto sector also gained between 4% and 6%. Optimism around exports and the temporary suspension of additional U.S. tariffs supported the rally, especially for export-heavy auto ancillaries. Tata Motors led the pack on strong EV expectations and positive sales sentiment. However, the sector was volatile, starting April on a weak note before rebounding mid-month.
Real estate stocks bounced back with gains of 4–6% in April, though the Nifty Realty index remained down on a year-on-year basis. Positive business updates and stable demand outlook for FY26 encouraged buying interest. Consolidation in the sector favoured larger players, while strong pricing trends supported revenue visibility. Despite gains, the space remained one of the more volatile and richly valued.
The biggest gainer in April was the defence sector, which surged over 11%. Government focus on indigenous manufacturing, fresh defence deals, and geopolitical tensions supported the rally. The sector benefited from sustained policy push and market optimism around strategic orders.
Among laggards, the IT sector underperformed again, marking its fourth consecutive month of decline. It fell around 3%, weighed down by global headwinds and weak sentiment in tech. While there were brief periods of optimism on account of U.S. tariff relief and some contract wins, the overall tone remained subdued. That said, attractive dividend yields provided some cushion to long-term investors.
The metal sector had a turbulent April, shedding over 5%. Trade war fears, particularly around Chinese exports and possible U.S. tariffs, led to a sharp correction early in the month. While there was a short-lived rebound following the suspension of certain tariffs, persistent volatility and concerns about global demand weighed on sentiment. Domestic price hikes in steel provided limited support.
The pharma and healthcare sector gave mixed signals. While there were some late-month gains, the sector took a hit earlier in April due to tariff-related announcements impacting drug exports. Several stocks faced heavy profit booking and sector-specific selling pressure. However, certain companies saw selective interest due to expectations of strong quarterly numbers.
PSU banks, despite long-term underperformance, showed signs of a rebound in April. Consumer durables gained on festive demand anticipation and attractive narratives. On the flip side, media stocks remained among the worst-performing sectors on a one-year basis, weighed down by structural issues and earnings pressures. Thematic indices like capital markets, SME, and transport/logistics also posted impressive gains for the month.
In the following sections, we provide a more comprehensive examination, outlook and detailed insights of some major sectors:
Auto:
The auto sector entered FY26 on a mixed note in April 2025, with varying trends across segments. While passenger vehicles posted modest year-on-year growth, supported by sustained demand in the utility vehicle space, there was some softness in entry-level models. Commercial vehicle sales dipped marginally, reflecting a slowdown in freight demand, though the bus segment showed early signs of strength. Meanwhile, the two-wheeler segment saw a significant correction from its March highs, with broad-based declines in domestic volumes, particularly among commuter bikes.
Export performance was more encouraging, especially in two- and three-wheelers, where several players recorded healthy year-on-year growth. Tractors, too, registered a strong start to the new fiscal year, buoyed by favourable crop prices, healthy procurement trends, and expectations of a good monsoon. This rural momentum is likely to provide a supportive base for continued growth in the coming quarters.
Looking ahead, sentiment in the auto sector will hinge on a few key factors. On the domestic front, a rural recovery backed by improved farm incomes, potential tax reliefs aimed at boosting consumption, and new product launches could drive a gradual volume rebound. Electrification trends are also expected to accelerate, particularly in the two-wheeler space, supported by rising adoption and policy incentives. In commercial vehicles, any uptick will likely be led by the bus segment and replacement demand.
That said, challenges such as elevated fuel prices, rising competition, and global supply chain uncertainties may keep the pace of growth uneven. Overall, the outlook for the auto sector remains cautiously optimistic, with demand recovery expected to strengthen as macroeconomic conditions stabilise and consumer sentiment improves.
Metals:
In April 2025, the Indian metal sector experienced divergent trends across steel and non-ferrous categories. Domestic steel prices edged higher, rising around 1.5% month-on-month, aided by the imposition of safeguard duties. However, this price support is expected to be short-lived, as the duty excludes imports from major FTA-partner countries, which account for a significant share of inbound shipments. At the same time, a notable ramp-up in domestic steel production capacity may further cap pricing power in the near term.
Globally, steel output and exports from China surged in April, putting pressure on prices amid sluggish domestic demand and rising trade tensions. Chinese producers continue to follow aggressive pricing strategies, which, coupled with soft global demand, pose a headwind for international steel markets. Meanwhile, key raw material costs have been on the rise, with coking coal and domestic iron ore prices increasing sharply, which could weigh on profit margins if steel realizations do not keep pace.
In the non-ferrous space, market sentiment remained cautious. Prices of key metals such as aluminium, copper, and zinc corrected due to rising global inventories and concerns around demand. Copper, for instance, faced selling pressure following a sharp increase in warehouse stocks, while zinc prices dropped significantly on higher LME inventories.
Looking ahead, the metal sector is likely to face a mixed outlook. While domestic infrastructure activity may offer some near-term support to demand, elevated input costs and global oversupply—particularly from China—could constrain profitability. With valuations already stretched in parts of the sector, upside may be limited unless there is a meaningful recovery in global demand or easing of trade restrictions. As such, the overall stance for the metal space remains neutral for the near term.
Chemicals:
The chemical sector witnessed broad-based price moderation in April 2025, continuing the trend of softening seen post-pandemic. Most commodity chemicals declined month-on-month, influenced by a sharp drop in crude oil prices, which fell nearly 14% due to global volatility and geopolitical tensions. However, a notable exception was the acetyl segment—comprising acetone, acetic acid, and their derivatives—which saw marginal price increases, driven primarily by a rise in upstream acetic acid costs.
Despite the temporary uptick in acetyls, overall price levels across key chemical inputs remain significantly below their pandemic-era peaks. Methanol and benzene, in particular, saw meaningful declines during the month, which could offer cost advantages to downstream manufacturers. However, with the sector now largely stabilised post the supply shocks of recent years, price movements are expected to stay within a tight range in the near term.
Structurally, companies focusing on complex, value-added products rather than commodity offerings are expected to outperform. Firms advancing up the value chain—especially those investing in high-skill manufacturing, specialised intermediates, or sectors like battery chemicals—are better positioned to benefit from long-term demand shifts. Additionally, growth opportunities remain robust for CRDMO players, who continue to gain from global outsourcing trends in research and manufacturing.
In summary, while commodity chemical prices may remain subdued in the short term, the medium- to long-term outlook appears favourable for players emphasising scale, specialisation, and innovation. The market is likely to reward differentiation and technology-led expansion over pure volume growth.
Banking/Finance:
The Indian banking sector enters May 2025 with a fundamentally strong backdrop, supported by solid earnings momentum, comfortable liquidity, and stable asset quality. However, recent market behaviour suggests a phase of consolidation, and the path forward will be shaped by a mix of macroeconomic signals, policy actions, and investor sentiment.
One of the key positives is the sustained strength in credit demand, particularly from retail, MSME, and agriculture-linked segments. While overall credit growth may have moderated from its previous highs, it remains on a healthy trajectory, with expectations of further improvement in FY26 and beyond. Liquidity conditions also appear favourable, with the Reserve Bank’s ongoing bond purchases expected to support lending activity and ease borrowing costs.
From an asset quality perspective, most banks have made meaningful progress in reducing stress, with lower non-performing assets and higher provision coverage. This trend is likely to continue, assuming stable economic conditions and no fresh systemic shocks. The improving quality of loan books also strengthens banks’ capacity to lend and grow profitably.
That said, there are emerging challenges to watch. Banks may face margin pressure in the near term as the transmission of rate cuts begins to reflect more in lending rates than in deposits. In addition, deposit growth continues to lag behind credit growth, raising concerns about funding sustainability if not addressed. Geopolitical tensions, global volatility, and regulatory oversight on unsecured lending could also introduce bouts of market nervousness.
Valuations in the sector remain relatively reasonable, especially in the public sector and large-cap private space, offering selective opportunities. Going forward, banks that can maintain strong asset quality, adapt to margin pressures, and drive deposit mobilisation are likely to outperform.
Important events & updates
A few important events of the last month and upcoming ones are as below:
- India’s manufacturing PMI rose to 58.2 in April 2025 from 58.1 in March, marking a ten-month high, driven by strong domestic and export demand.
- The HSBC India Composite PMI for April 2025 was 59.7, slightly below the flash estimate of 60.0 but above March’s 59.5. It marked the 45th straight month of growth, driven by a strong rise in manufacturing and the sharpest expansion in services in four months.
- The HSBC India Services PMI for April 2025 was revised to 58.7, slightly down from the preliminary estimate of 59.1. However, it still exceeded March’s reading and market expectations of 58.5, marking the 45th consecutive month of growth in services activity.
- The India-UK FTA is expected to have a positive long-term impact on trade and investment flows, which could boost market sentiment over time.
- The HSBC India Composite PMI for April 2025 was 59.7, slightly below the flash estimate but above March’s 59.5. It marked 45 months of growth, driven by strong manufacturing and the sharpest service sector expansion in four months.
Fundamental outlook:
The Indian market outlook is shaped by strong domestic economic indicators and corporate performance, but also weighed down by geopolitical risks and global economic factors. On the global front, trade tensions between the US and China, along with differing central bank actions, add uncertainty, while the outlook for global growth and stable crude oil prices remain important for market sentiment. Domestically, India’s GDP growth is forecasted to exceed 6.5% for FY26, supported by cooling retail inflation, with the CPI expected to moderate further in April 2025. The Reserve Bank of India (RBI) continues with an accommodative stance, having cut rates twice this year and planned significant liquidity support, which should bolster economic activity.
The business environment remains strong, with the HSBC India Composite PMI rising to 59.7 in April, the highest since August 2024, driven by robust performance in both manufacturing and services. Corporate earnings for Q4 FY25 have generally been positive, with the banking sector seeing record profits. However, some sectors showed mixed results, indicating potential volatility ahead. Investor sentiment will be influenced by management commentaries on future outlooks.
Institutional flows remain a key factor, with domestic institutional investors (DIIs) showing strong support, while foreign institutional investors (FIIs) displayed mixed behavior, reflecting the importance of consistent FII activity in shaping market direction. Valuations for the Nifty50 remain reasonable, trading at a discount to historical averages, suggesting a favorable environment for selective stock-picking, especially in large and midcaps.
However, geopolitical tensions between India and Pakistan have added volatility, with recent escalations raising uncertainty. While a ceasefire and de-escalation could trigger market recovery, a prolonged conflict may dampen sentiment and pose risks to India’s economic ambitions, particularly its attractiveness as a manufacturing hub. Overall, the Indian market remains resilient, but global and geopolitical risks will continue to influence short-term market dynamics.
Technical outlook.
The technical outlook for the Indian market in May 2025 reflects heightened caution and volatility, influenced by recent geopolitical developments, while the market consolidates after strong gains in April. As of May 9, 2025, the Nifty 50 closed at 24,008, down 1.4% for the week, while the Sensex closed at 79,454.47, a decline of 1.3%. This reversal followed a three-week winning streak, primarily impacted by escalating India-Pakistan tensions. The India VIX surged sharply, indicating increased market fear and expectations of heightened volatility.
In terms of key technical levels, immediate support for the Nifty 50 is seen around 23,800, with a crucial make-or-break level at 23,500, which aligns with the 200-day EMA. A breach below this could increase selling pressure, while further support is at 23,200 and 22,900. Resistance lies near 25,183 – 25,275, with a key zone at 24,400 – 24,500, and broader upside resistance around 26,000. Option data shows highest call writing at 25,500 and highest put writing at 24,000, indicating these as key near-term levels.
The Nifty 50 formed a bearish engulfing pattern on the weekly chart, hinting at potential further downside unless key resistance levels are reclaimed. Indicators such as ADX for Nifty falling below 18 and RSI nearing the neutral 50 mark suggest a likely consolidation or corrective phase.
In conclusion, the Indian market is expected to remain sensitive to geopolitical news, particularly regarding India-Pakistan relations. From a technical perspective, the market faces key support levels around 23,800 for Nifty which will be pivotal in determining the near-term trend. A de-escalation in geopolitical tensions could trigger a rebound towards resistance levels, while any negative developments could further test support zones
Outlook for the Global Market
US Market:
The US market outlook is marked by significant uncertainty, driven by a mix of economic data, Federal Reserve policies, and global geopolitical and trade tensions. A surprising 0.3% contraction in Q1 2025 GDP has raised concerns about a potential slowdown in economic activity, with the decline attributed to a surge in imports and reduced government spending. Inflation, while moderating with the March CPI falling to 2.4%, remains a concern due to a rise in the Producer Price Index (PPI), signaling persistent price pressures. The labor market shows stability with the unemployment rate holding steady at 4.2%, but there are signs of a slowdown in job growth, as evidenced by a rise in jobless claims and fewer job openings. While retail sales have remained strong, consumer confidence has weakened, reflecting concerns about the broader economic outlook.
The Federal Reserve’s stance remains cautious, keeping the benchmark interest rate steady at 4.25%-4.5% in May 2025. The Fed is taking a data-dependent approach, balancing the risks of inflation and rising unemployment. Despite earlier expectations of rate cuts, the recent GDP contraction and ongoing inflation pressures have made future moves uncertain, with some analysts now anticipating potential cuts later in the year. The Fed’s decisions will hinge on the data, particularly inflation and employment figures in the coming months.
The market also faces several risks, notably trade tensions and tariffs that could exacerbate inflation and slow economic growth. Geopolitical issues, particularly with countries like Pakistan, are another source of market volatility. Furthermore, corporate earnings reports will play a critical role in shaping investor sentiment, with weaker earnings potentially exerting downward pressure on stock prices. Despite these concerns, there are some bullish counterarguments, such as a resilient labor market and consumer spending. However, overall, the market is expected to remain volatile, with investors closely monitoring economic data, Federal Reserve communications, and geopolitical developments. Given the mixed signals, it is advisable for investors to remain cautious, focusing on fundamental analysis and staying alert to the evolving economic and policy landscape.
Outlook for Gold
The outlook for gold in the short to medium term is moderately bullish, though it comes with potential for volatility due to several influencing factors. As of now, gold is trading between $3272 and $3325 per ounce, with Indian gold prices around ₹91,499 per 10 grams.
Several bullish factors are supporting gold’s price. The Federal Reserve’s cautious stance on interest rate hikes, coupled with the potential for a softer US dollar, enhances the appeal of gold as a non-yielding asset. Geopolitical and trade uncertainties, particularly tensions between India and Pakistan, as well as ongoing trade concerns, have fueled safe-haven demand. Additionally, persistent inflation concerns, despite recent moderation in US CPI, continue to bolster gold’s status as a hedge against inflation. Technically, gold has broken through key resistance levels, and with a minor pullback, it is positioned for further gains, potentially targeting $3500 and higher. Central bank buying, especially by China, adds underlying support to prices.
However, there are bearish and neutral factors to consider. A rebound in the US dollar, particularly if geopolitical tensions ease or strong economic data emerges, could reduce gold’s appeal. Profit-taking after significant rallies is always a possibility, leading to short-term corrections. Additionally, failure to break through technical resistance levels might cause a consolidation or pullback in prices.
The upcoming US inflation data (CPI and PPI releases) on May 13th and 14th will be pivotal in determining gold’s direction. A higher-than-expected inflation figure could further support gold, while a lower reading might reduce its appeal. Additionally, the Federal Reserve’s communications on monetary policy, US-China trade talks, and geopolitical developments will remain crucial in shaping gold’s price movement.
Overall, while the outlook for gold is cautiously optimistic, investors should brace for potential volatility, with key catalysts in the form of inflation data and geopolitical developments likely to drive price fluctuations.
What should Investors do?
The Indian market outlook for May 2025 reflects cautious optimism, with recent geopolitical easing offering short-term relief. The ceasefire between India and Pakistan has lifted a key overhang, leading to improved sentiment and a likely gap-up opening in the coming sessions. While volatility remains elevated, key support levels around 23,800–23,700 on the Nifty offer attractive zones for accumulating fundamentally strong stocks. The overall market structure remains bullish, with moving averages aligned positively, suggesting that recent weakness could be a healthy correction within a larger uptrend.
Investors should continue to focus on companies with strong fundamentals and resilient earnings, particularly those delivering robust Q4 results. Stock selection based on quality and management commentary remains essential. The ongoing earnings season, along with global cues like US-China trade talks, will shape sentiment in the near term. Despite recent volatility, supportive domestic macro indicators, including moderating inflation and an accommodative monetary policy, offer a favourable backdrop for long-term investors.
Existing investors are advised to stay invested in quality names and use market dips near technical supports to increase exposure selectively. Rather than reacting to short-term volatility, the focus should remain on the long-term growth trajectory and earnings visibility. New investors should approach the market with patience, avoiding the urge to chase rallies. A staggered investment approach around support levels can help manage risk in the current environment.
Overall, a disciplined and stock-specific “buy on dips” strategy is recommended, supported by sound fundamentals and a watchful eye on evolving macro and geopolitical developments.
Disclaimer:
This article should not be construed as investment advice, please consult your Investment Adviser before making any sound investment decision.
If you do not have one visit mymoneysage.in