The key triggers to watch out in second half of 2025 include clarity on U.S. tariff policies and their impact on global trade flows, resolution of geopolitical tensions in the Indo-Pacific and Middle East, and progress on key bilateral deals such as the UK–India FTA, according to recent report of Smallcase Managers, an investment products and platforms provider.
However, the report suggested that investors closely monitor U.S. inflation trends for the remaining months of 2025. “For the year ahead, one needs to watch out for certain key developments that might impact the markets,” said Robin Arya, smallcase Manager and Founder, GoalFi.
While the US inflation seems quite benign now, the outlook for it is clouded due to the uncertain impact of tariff policies on the supply of goods in the US and, thus, inflation. The report anticipates that the US Fed could begin lowering rates, which would benefit the markets and strengthen FII flows, provided that trade agreements are swiftly reached and the supply of goods to the US is kept at competitive prices for the final consumer.
In this calendar year, the Fed has maintained rates in a straight line, citing the growing risk of unemployment and inflation in the face of uncertainty. According to the report, RBI MPC’s further rate cuts expectation is also a domestic development which will lead to an increase in economic growth and household consumption, benefiting the markets.
“With the interest-cutting cycle having started, it looks likely that if the monsoons are supportive and the inflation remains in control, there could be further interest rate cuts by the RBI, triggering growth in the economy,” said Vikas Gupta, smallcase Manager and CEO, Omniscience Capital.
Further, if earnings growth is supportive, then the markets could be quite buoyant by the end of 2025, Gupta added.
