Tariff-rattled markets face another week of potential tariff turmoil, with the global stock plunging  over 5 per cent. Investors are hopeful that the stock market may be close to at least a short-term bottom after Trump’s tariffs rocked global asset prices.

Asian stocks rout

Asian stocks and US stock futures are deep in the red in early trade on Monday. However, Japan’s Nikkei index that tumbled to a low, recovered over 1200 points to rule at 31,850, from the day’s low of 30,629. China, which imposed a counter tariff on the US, and the Hang Sang of Hong Kong are down 6 per cent 9 per cent, respectively.

India Ratings and Research (Ind-Ra) opines that while the direct impact of reciprocal tariffs on India is likely to be limited, the second order impact of excess supply into India due to the regional imbalances created by the US’ reciprocal tariffs could be seen on realisations in sectors such as chemicals, textiles, steel and industrial machinery. Further, the uncertainty on eventual tariffs and slowing global growth are likely to keep corporates cautious on their investment plans even if there are short-term opportunities. Consequently, monetary and fiscal policies may have to be supportive of growth. Amid the macroeconomic turbulence, the impact on GDP growth may be different than Ind-Ra’s initial assessment of 10bp in FY26.

“Reciprocal tariffs, while having limited direct impact for India, create uncertainty and the risk of volatility in global markets. The second order impact through supply chain re-orientations and approach towards private investments would be key elements to watch out for,” says Rakesh Valecha, Senior Director, Core Analytical Group.

Gift Nifty was at 22,140 against the Nifty futures Friday close 22.958.15, signals an over 800 points or 5 per cent weakness for Nifty at the open. However, analysts expect some recovery at the lower levels in the second half of trading.

Focus on RBI meet, TCS results

Analysts say besides global cues, investors will also look inwards for domestic cues such as the RBI meet, government measures to ward of tariff threat, the upcoming results season, especially of IT companies led by Tata Consultancy Services, and other Nifty bigwigs.

According to Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services, BDO India, market participants will closely track the long-term impact of the proposed tariffs, upcoming announcements from the RBI’s monetary policy stance amid expectations of a potential rate cut to strategise investment for the upcoming cycle.

Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd.: The RBI’s monetary policy outcome on April 9 will also be in focus, with the market expecting another 25 bps rate cut, and the Q4FY25 earnings season kicking off with TCS results on April 10. Investors will also watch out for March CPI data from the US and India, to be released this week.

“We believe that though the 27% tariffs on India are higher than expected, it is relatively lower compared to that levied on countries like China (34% + 20% earlier), Vietnam (46%), Thailand (36%), Indonesia (32%) and Bangladesh (37%), which compete with India for export share, thus, improving India’s potential export competitiveness. Overall, we expect that the impact of reciprocal tariffs on India will be limited on a national basis as India’s exports in the six most vulnerable sectors amount to only 1.1% of India’s GDP. There is possibility that the impact could further be reduced as India is in the process of negotiating a bilateral agreement with the US,” he added.

Meanwhile, foreign portfolio investors remain relentless in their selling.

Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited: “The trend of FPIs turning buyers in March changed in early April when FPIs turned sellers again. A major trend reversal in global stock markets happened after President Trump announced reciprocal tariffs on April 2. The reciprocal tariffs came much steeper than expected. The 10% base line tariff on all imports, the 25% tariff on all automobile imports and steep reciprocal tariffs on most countries is expected to raise inflation in the US and there are concerns that the US economy might even slip into stagflation. This has triggered massive selling in the US markets, where the S&P 500 and Nasdaq have lost more than 10% in two days. The Chinese retaliation to US tariffs has been quick. A full blown trade war will impact global trade and global economic growth. The steep decline in the dollar index to 102 is favourable for capital flows to emerging economies like India. However FPIs are likely to be in a wait and watch mode before turning buyers. The total FPI selling in India up to April 5 stood at ₹10,354 crores.”

Published on April 7, 2025