India-US Trade Talks Vital for Stock Market Optimism: Analysts
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Synopsis
As the new financial year begins, market experts highlight the impact of US tariffs and the importance of India-US trade negotiations in shaping market sentiment. Caution prevails as investors eye potential retaliatory measures and economic indicators.
Key Takeaways
- New financial year begins on a cautious note.
- Higher US tariffs are affecting market sentiment.
- India-US trade negotiations could positively influence markets.
- Safe-haven assets like gold are in demand.
- Investors are closely watching global trade dynamics.
New Delhi, April 5 (NationPress) The commencement of the new financial year (FY26) has started on a cautious note, primarily due to the implementation of higher-than-expected tariffs by the US, as noted by market analysts on Saturday. They emphasized that any positive outcomes from the ongoing India–US bilateral trade negotiations could act as a supportive factor for the market.
Industries such as IT and metals have lagged behind the overall market trends, raising concerns about the future of the US economy and possible retaliatory trade actions from other nations.
Vinod Nair, Head of Research at Geojit Investments Limited, indicated that investors will be vigilant regarding any counteractions taken by global trading partners, which could intensify geopolitical and economic uncertainties.
This cautious outlook is mirrored by the sustained increase in gold and bond prices, highlighting a significant shift towards safe-haven assets.
In the meantime, benchmark indices have extended their decline for a second consecutive session on Friday, dropping over one percent each, as a risk-averse sentiment has gripped global markets amid fears of a trade war resulting from US President Donald Trump's reciprocal tariffs, as per a Bajaj Broking Research note.
The Nifty index fell by 345.65 points or 1.49 percent, landing at 22,904.45. Investors are concerned that aggressive trade policies from the US could provoke retaliatory actions from other countries, escalating into a full-blown trade conflict. Such a scenario could disrupt global supply chains and hinder economic growth.
The broader market experienced significant declines, with the Nifty Midcap 100 and Nifty Smallcap 100 dropping by 2.91 percent and 3.56 percent, respectively. All sector indices faced notable reductions, with IT, Auto, Pharma, PSU Bank, Realty, Oil and Gas, and metals indices losing between 6 percent and 3 percent.
The index is currently hovering near the critical support zone of 22,700-22,800, and maintaining this position will be crucial for a potential rebound toward last week's high of 23,565 in the upcoming week.
Failure to stay above the support level of 22,700 might result in a further decline toward 22,300. Alongside developments concerning US tariff policies, market participants will also keep a watchful eye on the RBI's monetary policy outcomes and the resumption of the Q4 FY25 earnings season in the forthcoming week,” stated Bajaj Broking Research.
Investor focus is also firmly directed toward the upcoming MPC meeting, with the benchmark interest rate decision anticipated next week.
A favorable outcome could provide a boost to rate-sensitive sectors. Furthermore, crucial macroeconomic indicators—specifically, India’s inflation rates and US jobless claims—will be closely monitored as they are likely to shed light on the economic conditions in both regions, according to experts.
Meanwhile, market attention is gradually shifting towards the forthcoming corporate earnings season. The initial outlook appears subdued, with the risk of further downward revisions in earnings growth primarily due to weak demand and ongoing margin pressures.
