India’s market is always in the spotlight because it’s one of the fastest growing in the world. Recently theres been a mix of good news and some challenges. The Indian stock markets have been doing well thanks to lower inflation rates. The Consumer Price Index (CPI) dropped to 3.34% in March 2025 and the Wholesale Price Index (WPI) was at 2.05% the lowest in four months. However the World Bank lowered India’s growth forecast for the financial year 2025-26 (FY26) to 6.3% which is a bit lower than earlier expectations. On the corporate side Bajaj Housing Finance reported a strong 54% rise in profits showing strength in the financial sector.
Lower Inflation Brings Relief
Inflation is when prices of goods and services go up making things more expensive for everyone. In India two main indices measure inflation CPI and WPI. CPI looks at the prices consumers pay for things like food, clothes and fuel. WPI tracks the prices of goods at the wholesale level like those sold in bulk from factories.
In March 2025 CPI inflation fell to 3.34% a seven month low. This is great news because it means things are not getting too expensive for regular people. The drop was mainly because food prices which make up a big part of CPI did not rise as much. For example tomato prices dropped by 34% compared to last year. WPI inflation also eased to 2.05% down from 2.38% in February 2025. This was due to lower prices for things like crude oil and some non food items.
Lower inflation is good for the economy. It means people can afford to buy more and businesses don’t have to raise prices too much. The Reserve Bank of India (RBI) likes to keep CPI inflation around 4% so 3.34% is well within their target range. This also led to the RBI cutting the repo rate (the rate at which banks borrow from the RBI) by 25 basis points to 6.25% in February 2025. A lower repo rate makes loans cheaper encouraging people to spend and businesses to invest.
Why Are India’s Markets Happy?
When inflation goes down it’s usually good news for the stock market. Investors feel more confident because lower inflation means the economy is stable and companies can make better profits. In recent months Indian markets like the NSE Nifty 50 have been gaining. This is because people are hopeful about economic growth especially with rural demand picking up due to a good agricultural season.
The government’s efforts to control inflation like increasing the supply of key food items have also helped. For example record wheat and pulse production has kept food prices in check. Plus global oil prices have not spiked which is a big relief since India imports a lot of oil. All these factors have created a positive mood in the markets.
World Bank’s Lower Growth Forecast
While the markets are upbeat the World Bank gave a slightly cautious outlook. It cut India’s growth forecast for FY26 to 6.3% down from earlier estimates of 6.5% to 6.7%. This means the economy is still expected to grow but not as fast as hoped. The World Bank pointed to global challenges like trade tensions and economic uncertainty as reasons for the lower forecast. For example new tariffs announced by the US could affect India’s exports.
Another issue is weak tax collection in India which limits the government’s ability to spend on big projects. The World Bank also noted that India’s share in global trade is not growing as fast as its economy. For instance India’s apparel exports dropped from 4% of the global market in 2018 to 3% in 2022. To boost growth the World Bank suggests India should diversify its exports focusing on sectors like textiles, footwear and electronics.
Despite the lower forecast 6.3% growth is still strong compared to many other countries. India remains the fastest growing major economy and the World Bank expects inflation to stay manageable at around 4% in FY26. This should help reduce poverty and support rural demand especially with agriculture doing well.
Bajaj Housing Finance Shines
While the overall growth forecast is slightly lower some Indian companies are doing great. Bajaj Housing Finance a major player in the housing loan sector reported a 54% jump in profits for the last quarter of FY25. Their profit after tax (PAT) was ₹587 crore up from ₹381 crore the previous year. Their revenue also grew by 26% to ₹2508 crore.
This strong performance shows that the housing and finance sectors are doing well. Bajaj Housing Finance’s assets under management (AUM) grew by 26% to ₹114684 crore and they have the highest credit rating (AAA/stable) in their industry. This means they are trusted by investors and customers alike. The companys success is a sign that people are still borrowing and buying homes which is good for the economy.
What Does This Mean for India?
India’s economy is in a mixed but mostly positive phase. Lower inflation is making life easier for consumers and boosting market confidence. The RBI’s rate cut is encouraging spending and investment which should help growth. However global challenges and weaker tax collection are hurdles that could slow things down as the World Bank’s forecast suggests.
The good news is that India’s fundamentals are strong. Rural demand is picking up and sectors like finance and housing are performing well as seen with Bajaj Housing Finance. To keep growing India needs to focus on exports and create more jobs especially in industries like textiles and electronics. The government’s policies like the National Logistics Policy are steps in the right direction to make trade easier.
Looking Ahead
As we move into FY26 India’s economy will face both opportunities and challenges. Inflation is under control for now but things like heatwaves or global oil price spikes could create problems. The government and RBI will need to stay alert. At the same time India’s young workforce and growing industries give it a bright future.
For regular people lower inflation means more money in their pockets. For investors the strong performance of companies like Bajaj Housing Finance is a reason to stay optimistic. While the World Bank’s lower growth forecast is a reminder to stay cautious India’s economy is still on a solid path. With the right policies and a bit of global luck India can keep shining as one of the world’s top economies.
Sources:
- World Bank reports on India’s growth forecast
- Inflation data from The Hindu Business Line
- Bajaj Housing Finance results from X posts