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The past year has been one of the most eventful in recent memory for both the global economy and Indian equity markets. Global shifts, geopolitical challenges, and bold domestic reforms have shaped the path of our markets. Yet, amidst all the volatility, India’s story remains one of resilience and opportunity.

 

Global Shifts: “Buy China-Buy US”

In September 2024, China announced a $3.5 trillion stimulus package, which immediately diverted global capital flows towards Chinese equities available at attractive valuations. This triggered a wave of “Sell India–Buy China” trades.

Soon after, Donald Trump’s return to the White House in November 2024 boosted confidence in US markets, particularly Tech and AI sectors. Global allocations rushed into the US, leading to continued outflows from India and other emerging markets.

By January 2025, Trump’s focus on geopolitical tensions (Russia–Ukraine, Israel–Hamas) and his new tariff regime added fresh layers of uncertainty. India eventually faced 50% cumulative tariffs—a development that many saw as near-sanctions due to our imports of Russian oil.

 

Indian Resilience: Three Big Reforms in a Year

 While global uncertainties were rising, India delivered powerful domestic reforms:

  • Tax relief: Nil income tax up to ₹12 lakhs annual income, putting an estimated ₹1.2 lakh crore back into the hands of taxpayers.
  • Monetary push: RBI cut interest rates sharply by 1%, signalling strong pro-growth intent.
  • GST reforms: Rationalisation reduced compliance burden and lowered costs, boosting both consumption and business sentiment.

Together, these steps reflect the government’s clear focus on driving GDP growth and supporting domestic demand.

 

Market Dynamics: Domestic Investors Step Up

 Despite heavy FII outflows of nearly – ₹3.75 lakh crore over the past year, Indian markets have displayed remarkable resilience.

  • Mutual Fund SIPs are now at record highs of ₹27,000+ crore per month.
  • Contributions in Equity Markets from EPFO, insurance funds, and retail investors have further stabilised the market.
  • Even with such foreign selling pressure, the Sensex is only ~6% below its peak, while mid- and small-cap indices are down ~10–14%.

 

The Turning Point: From Resilience to Growth

The outlook is turning decisively positive:

  • S&P upgraded India’s sovereign rating to BBB, recognising structural reforms and macro stability.
  • Early signs of improved US–India trade dialogue are visible.
  • Domestic consumption is rising, and valuations have corrected to fair levels from earlier expensive zones.
  • With stability returning, FII inflows are expected to resume over the next 12–15 months.

 

What This Means for Investors

 We are entering a phase where the market will be a “stock-pickers playground”—with frequent sectoral and thematic rotations. Active management will be the key differentiator in wealth creation.

This is the right time to increase equity allocation. We particularly see opportunities in: Multi Cap Funds, Mid Cap Funds & Small Cap Funds. A disciplined approach—through 6-month STPs or long-term SIPs—will help capture the next growth wave while managing volatility.

As interest rates from FDs & Bonds have fallen, investors seeking FD++ returns can look at Balanced Advantage Funds & Multi Asset Allocation Funds for stable and tax-efficient income via the SWP option from these funds.

Closing Note

At Artham FinoMetry, we remain deeply optimistic about India’s equity journey. The coming years present a rare opportunity to participate in India’s structural growth story. Together, let us stay invested, stay disciplined, and create long-term wealth.

🌐 The Big Picture: Trade & Tariffs

 

Trade is the lifeline of the global economy. When countries exchange goods and services freely, it promotes growth, creates jobs, and drives innovation. However, tariffs—taxes imposed on imported goods—can disrupt this flow, often used by governments to protect domestic industries or address trade imbalances.

In recent months, trade policies have become central to geopolitics. The US-China tariff tensions, ongoing shifts in global supply chains, and regional trade agreements are all influencing the way capital moves—and ultimately how markets behave.

📉 How Do Tariffs Impact Markets?

 

  • Volatility: Uncertain trade environments often lead to increased market volatility as investors weigh risks and potential disruptions.

  • Sector-Specific Effects: Export-oriented sectors like IT, pharma, and manufacturing are particularly sensitive to tariffs and trade regulations.

  • Currency Movements: Trade restrictions can lead to currency fluctuations, affecting international investments and commodity prices.

  • Inflation & Interest Rates: Higher tariffs can increase the cost of goods, putting upward pressure on inflation—and possibly interest rates.

 

📊 But Here’s the Bigger Picture: India

 

Despite concerns around tariffs, India enjoys several macroeconomic tailwinds that make this a compelling time for long-term investors:

  • Relatively Lower Tariffs than China – This enhances India’s global competitiveness and supports the “China+1” strategy many companies are adopting.

  • Fiscal Boost by Finance Ministry – Recent income tax rate cuts provide more disposable income and support consumption.

  • Government-Led Capital Expenditure – Infrastructure spending is at an all-time high, acting as a multiplier for job creation and GDP growth.

  • Monetary Support by RBI – With rate cuts, ample liquidity, and a larger-than-expected dividend, RBI is fuelling credit growth and market momentum.

  • Robust Fiscal Health – India’s fiscal deficit is under control, and banks are in a much stronger position with healthy balance sheets and improving NPA levels.

  • Forecast of an Above-Average Monsoon – This bodes well for rural demand and the agri economy.

  • Lower Crude Prices – A major relief for inflation and India’s current account balance, benefiting consumers and businesses alike.

📈 What Should Smart Investors Do?

 

  1. Stay Diversified: Markets react to global events quickly. A well-diversified portfolio across asset classes—Mutual Funds, Bonds, Corporate FDs, and even Alternate Assets—can protect you from overexposure.

  2. Think Long-Term: Trade disruptions may cause short-term market corrections, but strong businesses and themes will continue to thrive over time.

  3. Focus on India’s Strengths: India continues to position itself as a global manufacturing and digital hub. Sectors aligned with these themes can offer structural growth.

  4. Track Global Trends Locally: Whether it’s a sector fund, a global strategy through PMS, or even Start-Up investing—stay tuned into how global events shape local opportunities.

At Artham FinoMetry, our approach is to guide you through changing times with clarity, conviction, and strategic thinking. With access to a wide spectrum of solutions—from Mutual Funds and PMS to Bonds, Insurance, and Start-Ups—we’re here to help you stay ahead.

Trade dynamics and tariffs may bring short-term noise, but with the right strategy, they also open windows of opportunity. Let’s use knowledge as our compass and long-term planning as our anchor.