India's equity markets emerge resilient amid global trade war shocks

The BSE 500 recorded a 6.25 per cent gain in March — its best monthly performance in 15 months, indicating that much of the market excess has likely been corrected.

India’s macro fundamentals are notably resilient. GDP growth is projected at 6.5 per cent in FY25, supported by strong domestic consumption, capex, and manufacturing upcycle, according to the report by PL Asset Management, the asset management arm of PL Capital Group (Prabhudas Lilladher).

The March Manufacturing PMI rose to 58.1 — an eight-month high — while industrial output expanded 5 per cent YoY in January.

The re-emergence of US-China trade tensions in April 2025 has impacted global indices, echoing the market behaviour last seen during the 2018 trade war.

While indices like the S&P 500 and Nasdaq fell by 13 per cent and 11 per cent respectively, India’s Nifty 50 remained relatively resilient, falling just 3 per cent.

“Spreads for higher risk factors are near zero, a point from which historically markets have entered a recovery phase. In recent months, Quality factor bottomed out, and we’re now seeing early signs of a rotation back towards Value, suggesting a market tilt towards fundamentally cheaper, cyclical names,” the report mentioned.

Momentum’s dominance has faded sharply, as investors shift focus to low volatility. The Smallcap outperformance has unwound, with rotation back into Largecaps, reflecting a market preference for size and stability. These are signs as the market positions itself for a recovery phase.

“The recent trend in early 2025 shows a moderate rise in stocks near their lows, suggesting caution among investors amid potential uncertainties or corrections. However, with extreme pessimism already built in, this could signal that a rebound is on the horizon as markets begin to price in a potential turnaround,” the report noted.

“As global markets recalibrate to a world shaped by geopolitical fragmentation and macro uncertainty, our strategies remain focused on adaptive, quantitative frameworks that capture alpha across cycles,” said Siddharth Vora, Fund Manager, PL Asset Management Executive Director, PL Capital (Prabhudas Lilladher).