Debt Market Update


Debt Market Update

  • Retail inflation (CPI) cooled to a 67-month low of 3.34% in March 2025 (to 3.61% in February 2025), helped by softening food prices. This is the second month retail inflation stayed below the RBI's 4% target. For FY25, inflation averaged 4.6%, down from 5.4% in FY24.
  • WPI (wholesale inflation) eased to 2.05% in March 2025, down from 2.38% in February 2025, amid lower food and fuel prices. Primary articles prices fell 1.07%, with notable drops in crude petroleum (-2.42%) and food articles (-0.72%). WPI Food Index dipped slightly (189.0 to 188.8); food inflation eased to 4.66%. Fuel and power inflation was 0.20% in March 2025. Manufacturing inflation rose to 3.07%.
  • IIP growth moderated to 2.9% in February 2025, the weakest in six months, down from January's 5.0% high. Manufacturing output, the key driver, expanded by 2.9%, slowing from 5.5% a month earlier. Mining activity softened to 1.6% growth, while electricity generation improved slightly to 3.6%. In manufacturing, basic metals (5.8%), motor vehicles and trailers (8.9%), and non-metallic mineral products (8.0%) were notable bright spots, buoyed by higher production of steel, cement, and auto components.
  • India's core sector growth rebounded to 3.8% in March 2025, led by strong performance in cement, steel, and electricity, though still lower than the 6.3% seen a year ago. The three sectors offset declines in coal, fertilizer, and refinery output. The core sector's recovery contrasts with a broader industrial slowdown—February's IIP growth hit a six-month low at 2.9%, reflecting persistent weakness in manufacturing and mining.
  • April GST collection hit a record Rs 2.37 lakh crore, up 12.6% YoY. The previous peak (Rs 2.10 lakh crore) was in April 2024; the March 2025 number was Rs 1.96 lakh crore.
  • March 2025 saw India's exports inch up 0.7% to USD 41.97 bn, with imports surging 11.3% to USD 63.51 bn, pushing the trade deficit to USD 21.54 bn. In FY24, exports were flat at USD 437.42 bn, while imports rose 6.62% to USD 720.24 bn. Total goods and services exports grew 5.5% to USD 820.93 bn.

Source: RBI, Bloomberg, CCIL, MOSPI
*BE - Budget Estimates

Past performance may or may not be sustained in future and is not a guarantee of any future returns, and should not be used as a basis of comparison with other investments. Index performance does not signify scheme performance Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

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