Market Review March 2025

World happenings:
Global markets saw mixed trends in March 2025. While the U.S. stock market struggled, with the S&P 500 falling nearly 5.75% and the Dow down 4.2%, investors globally were cautious. Factors contributing to the decline included uncertainty around the U.S. Federal Reserve’s rate cut timelines, persistent inflation, and mixed corporate earnings.

Bitcoin continued its upward trajectory, remaining strong after setting record highs earlier this year, while gold maintained its momentum as a preferred safe-haven asset. Oil prices stayed volatile, hovering around $82 per barrel due to fluctuating demand projections and OPEC+ production decisions

In Asia, central banks maintained a wait-and-watch approach as inflation data showed mixed signals. The European Central Bank, too, held rates steady, focusing on maintaining growth momentum. Despite global headwinds, India remained relatively stable, supported by domestic demand and resilience in the services and manufacturing sectors.

Market Roundup:
The Indian stock market bounced back in March after a rocky start to the year. The BSE Sensex rose 5.77% and the NSE Nifty 50 climbed 6.30%, signaling positive investor sentiment. However, despite this rally, mutual fund flows showed signs of strain. Equity mutual fund inflows dropped by 14% to ₹25,082 crore, the lowest in 11 months, compared to ₹29,303 crore in February. This decline was largely driven by a sharp fall in inflows into Sectoral/Thematic funds, which plummeted by 97% from ₹5,711 crore in February to just ₹170 crore in March.

All 11 equity mutual fund categories still managed to register positive inflows. Flexi-cap funds led the way with ₹5,615 crore, followed by small-cap funds at ₹4,092 crore and mid- cap funds at ₹3,438 crore. Large-cap funds, however, saw a minor decline of 13% MoM, ending with ₹2,866 crore in inflows.

Debt mutual funds faced a significant setback, witnessing outflows of ₹2.02 lakh crore, compared to ₹6,525 crore in February. Liquid funds saw the highest redemption of ₹1.33 lakh crore as investors moved money out at the financial year-end. Hybrid funds also saw a tough month, with ₹946 crore pulled out in March—quite a turnaround from the ₹6,803 crore that flowed in during February.

On the brighter side, the passive investment space showed promise. Index funds and ETFs saw strong inflows totaling ₹14,148 crore, led by "Other ETFs" with ₹10,961 crore and index funds at ₹3,500 crore. Fund of Funds investing overseas and gold ETFs, however, saw mild outflows.

The industry’s overall Assets Under Management (AUM) rose by 2% MoM, reaching ₹65.47 lakh crore, showing continued long-term interest despite short-term shifts.

Conclusion:
March was a month of contrasts—while the markets cheered with a solid rally, mutual fund flows suggested cautious optimism. Investors seemed to take profits or rebalance portfolios after February’s correction, leading to lower equity inflows. A big chunk of withdrawals came from debt and hybrid categories, likely due to year-end adjustments and tax planning.

Despite the dip, the trend of positive equity fund inflows for the 49th consecutive month indicates that Indian investors are growing more resilient. At FIKAA, we believe this is the time to stay disciplined. Market ups and downs are inevitable, but long-term wealth is created by those who stay consistent. Stick to your SIPs, review your asset allocation, and focus on goals—not noise.

Sources:
AMFI & MoneyControl

Sapna Jain

Collaborations & Partnerships team | FIKAA