Market outlook for the week (07-Apr to 11-Apr)

7 Apr 2025 , 10:29 AM

SECTORAL STORY FOR THE WEEK TO APRIL 04, 2025

The week to April 04, 2025 saw Nifty and Sensex showing losses of -2.61% and -2.65% respectively. During the week, FPIs were net sellers in Indian equities to the tune of $1,210 Million. Here are 20 key sectors for the week.

Sectoral Index	Weekly Returns	Index (04-Apr)	Index (28-Mar)
Nifty FMCG	0.45%	53,830.70	53,589.80
Nifty PSU Banks	0.06%	6,266.95	6,263.40
Nifty Banks	-0.12%	51,502.70	51,564.85
Nifty Private Banks	-0.29%	25,659.85	25,733.35
Nifty Healthcare	-1.86%	13,426.80	13,681.30
Nifty Chemicals	-1.97%	27,329.69	27,879.52
Nifty Non-Banks	-2.00%	25,931.70	26,459.60
Nifty Capital Markets	-2.07%	3,345.10	3,415.75
Nifty India Defence	-2.09%	6,260.45	6,393.90
Nifty Mobility	-2.33%	17,882.85	18,309.45
Nifty Consumer Durables	-2.47%	34,772.65	35,652.20
Nifty Infrastructure	-2.67%	8,231.65	8,457.80
Nifty MNC	-3.11%	25,426.00	26,241.50
Nifty Automobiles	-3.30%	20,593.15	21,295.50
Nifty Realty	-3.32%	823.05	851.30
Nifty CPSE	-3.38%	5,932.15	6,139.80
Nifty Oil & Gas	-3.94%	10,134.10	10,549.70
Nifty India Digital	-4.84%	7,861.95	8,261.90
Nifty Metals	-7.46%	8,414.45	9,092.50
Nifty IT	-9.15%	33,511.40	36,886.15

Data Source: NSE

Out of 20 sectoral indices only 2 gave positive returns, while 18 gave negative returns. The negative triggers came from Trump tariffs and global slowdown fears. Hence, the worst hit sectors were the likes of IT and Metals. FMCG and PSU banks, being domestic oriented business models, were largely immune to the Trump tariffs. Among others, sectors like healthcare were impacted less as the reciprocal tariffs would not apply to them, for now.

Overall, the average returns of the 20 sectors stood at -2.79%. The top 10 sectors gave an average return of -1.22%, while the bottom 10 sectors delivered average returns of -4.36%. A total of 14 out of the 20 sectors corrected more than 2% during the week, of which 8 sectors corrected more than 3% and 2 sectors corrected more than 7% for the week. Domestic oriented businesses did relatively better than globally dependent sectors.

WEEK THAT WAS; THE GOOD, THE BAD AND THE UGLY

One factor that was a major boost for the market this week was the sharp fall in crude oil prices to a 4-year low of $65.10/bbl. For an import-dependent Indian economy, this can help rein in the CAD substantially. Among other positives, Trump kept the pharma industry outside the purview of reciprocal tariffs to ensure economical healthcare. Also, the centre announced an incentive scheme for domestic manufacture of heavy mining equipment.

Of course, the big risk on the downside this week was the 27% reciprocal tariffs imposed by the US. This is not only likely to make exports costlier for India, but also threatens to slow down world trade and global economic output. That could have repercussions for several globally dependent sectors. Also, the government now has a ₹12 Trillion redemption liability on sovereign gold bonds (SGBs); and it is almost becoming like a naked short on gold.

STOCK MARKET TRIGGERS FOR COMING WEEK TO APRIL 11, 2025

Here are key triggers that could influence stock markets next week.

• The all-important RBI monetary policy rate decision will be out on April 09, 2025. The markets have already factored in another 25 basis points rate cut by the RBI, especially considering the sharp fall in food inflation.
• In other data points, the CPI inflation for March will be put out on Friday, along with the IIP figure for February 2025. CPI inflation had fallen to 3.61% last month and is likely to trend around these levels. The focus of IIP will be more on manufacturing IIP.
• No discussion of the coming week will be complete without a detailed debate on the impact of 27% reciprocal tariffs imposed by the US. While, there could be a short term impact on exports, India will also get an edge over China in exporting to the US.
• In global data points, focus will be on FOMC minutes to be announced on Wednesday for rates trajectory. Also, with crude falling to a 4-year low of $65.10/bbl, it remains to be seen how it helps the trade deficit. USDINR has been stable, but will be in focus.
• Key global data points. FOMC minutes, EIA crude stocks, consumer credit, jobless claims, CPI Inflation, PPI, Fed Balance Sheet (US). Eurogroup Meetings (EU); Current Account Balance (Japan); CPI, PPI, Trade Balance (China); HPI, BOE Credit Survey, GDP, Industrial Production, Trade Deficit (UK).

What does this mean for Nifty and Sensex in the coming week to April 11, 2025.

PARTING THOUGHTS ON MARKET INDEX LEVELS

VIX was almost flat at 12.72 for the week. However, with dwindling market volumes, VIX is becoming less representative.

• Nifty closed the week at 22,904 Spot. Nifty has immediate support at 22,770 and major support at 22,412. Immediate resistance is at 23,127 and later at 23,484. Nifty stays a short play till it decisively breaks above 23,306 with volumes. Longs only after that.
• Sensex closed the week at 75,365 Spot. Sensex has immediate support at 74,984 and major support at 73,967. Immediate resistance is at 76,002 and later at 77,019. Sensex is a short play, till it breaks above 76,633 with volumes. Longs have to wait till then.

With the rise in uncertainty, post reciprocal tariffs, the VIX went up to 13.76 levels. The underlying theme for the market remain the tariff regime and the risk of a global slowdown. However, traders will also focus on the RBI MPC rate decision, the Fed minutes; and above the aftermath of the sharp fall in crude oil prices to a 4-year low.