Will Market Sentiment Shift Amid Tariff Concerns and Earnings Season?

Mumbai, July 12 (NationPress) The markets have continued to drift lower this week, experiencing a decline of over one percent, mainly due to the ongoing uncertainty regarding global tariffs and a less-than-encouraging start to the earnings season, according to analysts on Saturday.

While the initial sessions maintained a largely stable tone, profit booking in the concluding sessions pulled the indices down. Ultimately, both the Nifty and Sensex wrapped up the week near their lows, closing at 25,149.85 and 82,500.47, respectively.

Ajit Mishra, SVP of Research at Religare Broking Ltd., noted that sentiment has been dampened due to escalated global trade tensions following renewed tariff threats from U.S. President Donald Trump towards Canada and other significant partners.

Expectations for an interim trade deal between the U.S. and India had surfaced, but the absence of clarity has kept risk appetite subdued. Furthermore, a disappointing start to the Q1 earnings season—particularly after IT giant TCS reported below-expectation results—intensified market pressure in the final session, he added.

Consumption-driven sectors like FMCG and discretionary stocks saw selective buying, buoyed by indications of a revival in urban demand and improving margins.

Factors such as easing inflation, falling interest rates, and a favorable monsoon have contributed to an overall positive sentiment backdrop.

Vinod Nair, Head of Research at Geojit Investments Limited, remarked, “The broader indices have dipped into negative territory due to a lack of triggers to uphold current premium valuations and uninspiring results from a key IT player, raising concerns over FY26 earnings estimates.”

As the Q1 FY26 earnings reports come in, investors are keenly observing guidance on margins and sector dynamics.

Moving forward, the earnings season is set to take center stage with a busy calendar that includes results from HCL Tech, Tech Mahindra, Axis Bank, ICICI Bank, Wipro, JSW Steel, L&T Finance, and HDFC Bank, among others.

On the macroeconomic front, participants will closely watch the WPI and CPI inflation data scheduled for July 14 for additional insights into the economy. Alongside these, the trends in FII flows and fluctuations in crude oil prices will also remain in traders' sights, as noted by market analysts.

Globally, markets will be monitoring any updates regarding trade negotiations and tariffs, as well as significant economic data releases such as U.S. inflation.

Mishra concluded, “We expect a consolidation phase in the Nifty index with a negative bias in the near term, following the recent declines. Volatility is anticipated to persist amid global uncertainties and the evolving earnings season. Traders should adopt a stock-specific strategy, concentrating on firms demonstrating robust earnings and relative strength.”