Key Market Events: Trump Tariffs, FY26 Kickoff, and PM Modi's Thailand Visit

The first week of April 2025 promises to be eventful for investors and market watchers, with several high-impact developments poised to influence global and domestic markets. From international trade tensions to important economic data releases, here's what to watch for in the coming days.

Global Markets Brace for Trump's Reciprocal Tariffs

Global markets face potential pressure as US President Donald Trump is set to introduce a second round of reciprocal tariffs on April 2. This move comes as part of the administration's ongoing trade policy adjustments and could significantly impact international trade relations and market sentiment worldwide.

Investors will be closely monitoring how these tariffs affect various sectors and the potential retaliatory measures from trading partners. The implications could be particularly significant for export-oriented economies and companies with substantial exposure to US markets.

New Financial Year 2026 Begins

April 1 marks the beginning of the new financial year (FY26) in India, bringing with it fresh economic targets, budget implementations, and corporate planning cycles. This transition comes after a positive close to FY25, with the Nifty rising 6.99% and Sensex gaining 6.78% over the fiscal year.

The benchmark indices have shown resilience in recent months, with March seeing the Nifty end 6.30% higher and the Sensex close 5.76% up, snapping their multi-month losing streaks. This positive momentum provides an encouraging backdrop for the start of the new financial year.

PM Modi's Diplomatic Mission to Thailand and Sri Lanka

Prime Minister Narendra Modi is scheduled to visit Thailand and Sri Lanka between April 4 and April 6, where he will attend the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Summit. This diplomatic engagement could potentially yield trade agreements and regional cooperation initiatives that might influence certain sectors of the Indian economy.

The visit underscores India's continued focus on strengthening relationships with neighboring countries and enhancing regional economic cooperation, potentially opening new avenues for trade and investment.

Key Economic Data Releases

Several important economic indicators are scheduled for release during the week:

India's Balance of Payments for Q4 and current account as a percentage of GDP
Infrastructure output data for February
Nikkei S&P Global Manufacturing PMI for March (Wednesday)
Nikkei Services PMI for March (Friday)
Foreign exchange reserves data (Friday)

These indicators will provide valuable insights into India's economic health as it enters the new fiscal year. Particular attention will be paid to the manufacturing and services PMI figures, which serve as leading indicators of economic activity.

Global Economic Indicators to Watch

Internationally, several key data points will be released that could influence global market sentiment:

Australia's retail sales for February and Reserve Bank of Australia's interest rate decision
China's Caixin Manufacturing PMI for March
US Manufacturing PMI, ISM data, and construction spending
US nonfarm payrolls and unemployment rate (Friday)
OPEC meeting (Thursday)

Of particular significance is the Reserve Bank of Australia's interest rate decision, which will be closely watched as an indicator of global monetary policy trends. Additionally, the OPEC meeting could impact oil prices, affecting energy-related stocks and overall market sentiment.

Primary Market Activity

The primary market in India is expected to remain relatively quiet during the week, with no major mainboard IPOs scheduled. This follows a notable slowdown in March, which saw a complete absence of mainboard offerings throughout the month.

Currently active SME IPOs include Infonative Solutions Ltd., Spinaroo Commercial Ltd., and Retaggio Industries Ltd., offering some opportunities for investors interested in the small and medium enterprise segment.

Corporate Actions

Several companies will have significant corporate actions during the week:

RailTel Corp., United Spirits Ltd., and Varun Beverages Ltd. shares will turn ex-date for interim dividends
Ranjeet Mechatronics Ltd. and Sal Automotive Ltd. shares will turn ex-date for their bonus issues

Investors holding these stocks should take note of these dates as they could affect the trading patterns and valuations of these securities.

Market Outlook

As markets enter the new fiscal year, the overall sentiment appears cautiously optimistic, backed by the positive close to FY25. However, challenges remain, particularly from global trade tensions and potential volatility in international markets.

Investors would be wise to monitor both domestic economic data and global developments closely, especially the impact of Trump's tariffs and the outcomes of key central bank decisions. These factors, combined with the start of the new fiscal year, could set the tone for market performance in the early months of FY26.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

India's Economy Projected to Grow at 6.5% in FY26: Key Insights from EY Report

India's economic trajectory continues to show resilience despite global headwinds, with the latest EY Economy Watch report projecting a 6.5% growth rate for the fiscal year 2025-26. This forecast comes as the country makes steady progress toward its ambitious Viksit Bharat (Developed India) goals, highlighting the need for strategic fiscal realignment to support long-term development.

Current Economic Performance

According to the revised national accounts data released by the National Statistical Office (NSO) last month, India's real GDP growth rates have been recalibrated at 7.6% for FY23, 9.2% for FY24, and 6.5% for FY25. For the current fiscal year (FY25), the third quarter growth has been estimated at 6.2%, necessitating a substantial growth of 7.6% in the fourth quarter to achieve the annual target of 6.5%.

Economic analysts note that achieving this fourth-quarter target would require an exceptional 9.9% growth in private final consumption expenditure – a level that has been rare in recent years. The alternative path would involve significantly boosting investment expenditure, where government capital expenditure plays a critical role in stimulating economic activity.

Fiscal Considerations and Challenges

The report highlights that the government's fiscal deficit, as per revised estimates, may be affected by subsequent supplementary demands for grants. However, higher levels of nominal GDP could provide some cushion for absorbing these increases when measuring the fiscal deficit relative to GDP.

The EY Economy Watch March edition projects India's real GDP growth at 6.4% for FY25, slightly below the NSO estimate, before climbing to 6.5% in FY26. This modest but steady growth projection underscores the importance of fiscal prudence while simultaneously investing in critical development areas.

Human Capital Investment: The Key to Sustainable Growth

A significant focus of the EY report is the need for enhanced investment in human capital development. With India's changing demographic profile and increasing working-age population, the report suggests that:

Government education spending may need to rise to 6.5% of GDP by FY2048 from the current 4.6% to meet workforce requirements
Health expenditure by the government should increase to 3.8% of GDP by FY2048, compared to just 1.1% in 2021
Low-income states with higher proportions of young populations will require additional support through equalization transfers

DK Srivastava, Chief Policy Advisor at EY India, emphasized: "India's changing age structure is expected to increase the share of working-age individuals in the total population. If productively employed, this can create a virtuous cycle of growth, employment, savings, and investment."

Bridging Regional Disparities

The report also explores how equalization transfers can help address regional disparities across Indian states. These fiscal mechanisms could ensure that states with lower fiscal capacity receive adequate funding for social sector investments, particularly in education and healthcare infrastructure.

To sustain long-term growth, EY recommends gradually increasing India's revenue-to-GDP ratio from the current 21% to approximately 29% over time. This fiscal strengthening would provide the necessary resources for human capital investments while maintaining fiscal discipline.

Fourth Quarter Growth Challenges

The immediate challenge for the Indian economy lies in achieving the required 7.6% growth in the final quarter of FY25. Economic experts suggest that boosting government capital expenditure will be crucial to reaching this target, as the projected 9.9% growth in private consumption appears ambitious given historical trends.

Despite these short-term challenges, the overall outlook for India's economy remains positive, with steady growth projected to continue through FY26, supported by strategic investments in human capital and infrastructure development.

Looking Ahead: The Path to Viksit Bharat

The EY report concludes that a well-calibrated fiscal strategy that balances human capital development with fiscal prudence will be essential for enhancing India's long-term growth prospects. As the country continues its journey toward becoming a developed nation, investment in education, healthcare, and infrastructure—coupled with prudent fiscal management—will remain key priorities for policymakers.

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Sunday, March 30, 2025