US TARIFF AND INDIAN MARKETS

Dear patrons, the long pending trade deal between India and the US has culminated into the US imposing 25% tariff on India and penalizing it for buying energy from Russia. India and US have been at loggerheads for the trade deal with an eye on the deadline (set by US president) of 1st August. Indian delegation also visited the US, but the deal failed to take off. How much of an impact will the new tariff regime have on India and how will the markets take it?

In our opinion Indian economy is very resilient and is driven by domestic consumption more than exports. IMF in its recent report has increased its forecast on growth of Indian economy from 6.2% to 6.4% for FY26. India remains the fastest growing big economy in the world. Indian exports to US are a meagre 2% of its GDP, that too mostly in ultra luxury items like diamonds. Bulk of Indian exports to US are in pharma which is exempt from tariff. Sure enough, some exporters will face hard time due to these tariffs but the overall picture doesn't look that bad either.

India is also being penalized for buying energy from Russia. This step is absolutely uncalled for and proves the US hegemony. India, by buying Russian oil has managed to keep the global economy, including the US economy, afloat. Had India not bought the cheap Russian oil, crude oil prices would be on the boil by now, endangering global growth. US would be grappling with high inflation and the FED would be in no position to cut interest rates. US should be grateful to India for saving its economy.

How would markets react? In our view, Indian markets after a small jitter, should shake off this tariff thing and things should be normal in no time. Markets have a habit of not liking uncertainties, now that the lead is off the tariff stuff markets should normalize. Moreover, as per Dow theory, "Markets discount all information". In our view markets have discounted the tariff and MAGA stuff far more than it deserved.

Investors should look to make most of this opportunity and add on to quality stocks. Opportunities like these are seldom available.

Stay Invested!!!

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk.

Week Ending July 25th 2025

Dear patrons, the Indian markets were fully in a bear grip for last two days of the week gone by. Almost all sectoral indices along with the benchmark indices closed deep in the red. Quarterly results failed to enthuse the markets as most corporates declared lackluster performance. 

FIIs have been selling consistently for last couple of weeks while domestic institutions were buyers over this period. Crude oil as well as precious metals remained in a range for the week. The US in the meanwhile has signed trade deal with the EU, while Indian trade deal remains elusive.

Globally the markets remained pretty buoyant with the US concluding trade deals with the EU and Japan among major economies and many of the smaller economies. US indices like the Nasdaq and S&P 500 posted new lifetime highs on all trading days. Japan's Nikkei shot up by over 3% on trade deal news.

Indian markets are quite strong fundamentally but consistent FII selling is not allowing the markets to move upwards. There is no foreseeable reason for this consistent outflow on FII front barring a few commentaries by domestic corporates fearing growth momentum.

Amidst the mayhem in the markets, India concluded its trade deal with the UK. The India-UK free trade agreement should provide a much-needed boost to growth. Investors may focus on specific sectors like textile, which are likely to benefit from this trade deal.

Let's look at the charts now and try to figure out what lies in store for the coming week.

As mentioned in the previous blog Nifty stumbled around its resistance of 25200 and dropped towards support of 24800 (You may read it here Weekly Market Update: Week Ending July 18th 2025). For the coming week Nifty should find support near 24800-24750 while 25000 should act as stiff resistance. Close above 25000 is needed for any up move in the Nifty. Reiterating that, as long as Nifty stays above 24500 it remains a "Buy-On-Dips" market.

BankNifty remained very volatile over the last week. While ICICIBANK and HDFCBANK results took the BankNifty close to its lifetime high levels, other banking and NBFC results put breaks on its upward trajectory. For the coming week BankNifty has strong support around 56000 while 57000 should act as strong resistance.

We expect the markets to remain highly volatile during the week, owing to derivatives contract expiry for the month of July. Traders need to be cautious and nimble footed while adhering to strict stop losses. There may be upside in the markets on account of short covering. Institutions have big, short positions in the indices. 

"How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case." ~ Robert G. Allen

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk. 

Week Ending July 18th 2025

Dear patrons, the Indian markets spent the entire last week, consolidating in a narrow range and closed at the lower end of the range on last trading session. Benchmark Nifty lost close to three quarters of a percent over the week to close below 25000 for the first time in July. BankNifty was weaker of the two indices owing to poor set of numbers by one of the premier banks i.e. Axis Bank.

Corporate results, as stated in the last blog have played the spoil sport. None of the major results could manage to lift the market mood be it from banking space or IT. The mood, however, can turn bullish if big companies announce good results over the weekend. Corporate behemoth Reliance Industries declared good result for Q1FY26, which, may enthuse the markets. It posted a 25% growth in profits YoY. Banking bigwigs ICICIBANK & HDFCBANK posted decent results and should provide a much-needed boost to bulls to carry the markets northwards.

In another good news for the markets and the economy, inflation is at 77 months low of 2.1%, paving way for yet another rate cut for the RBI.

Globally, the US markets are surging ahead every passing day. Nasdaq and S&P 500 both made new lifetime highs. The Dow Jones has also been moving up gradually. Inflationary pressure, however, is still lurking large on the US markets. European markets were also quite upbeat over the week.

Let us take a look at the charts and try to figure out what lies in store for the coming week

As mentioned in the previous blog Nifty moved downwards towards 24900 last week. (You may read it here Weekly Market Update: Week Ending July 11th 2025). For the coming week Nifty should find support around 24800 while resistance is placed around 25200. Nifty needs to close above 25300 for more upside to commence. A close below 24750 may lead to further downside. As long as Nifty remains above 24500 it is a "Buy-On-Dips" market.

As stated in the last blog BankNifty fell towards 56000 in one swift move to close around 56300. It has strong support around 56000. Break below 56000 may lead to another 1000 point cut in BankNifty. On the upside 56700-56800 should act as resistance. Move beyond 56800 should lead the BankNifty towards new lifetime high levels.

Traders need to be cautious ahead of results in stocks, as wild moves on either side can't be ruled out. Adhering to strict stop losses would prove to be a blessing. There should be lot of opportunity on either side for traders. Investors may look to accumulate good quality stocks in the current fall.

"The markets are like a weather; you may not like it, but you have to bear it." ~ Rakesh Jhunjhunwala

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk. 

Week Ending July 11th 2025

Dear patrons; after a week of consolidation markets slid on Friday to crack below all important support level of 25200 on the Nifty. All sectoral indices bore the brunt of sell off after IT giant TCS results. The tone set by the first major result in Q2FY26 is not very promising, though some sectors are likely to outperform on results front.

TCS result on the face don't look too bad either, however, higher bottom-line may be attributed to other income and rising USD against the INR. The markets have probably discounted these two factors while reading the numbers. Future results from the IT space are expected to follow suit. The IT index looks weak and a potential fall of up to 10% from current levels to 34200 can't be ruled out. With support around 36000.

Globally, the US markets have remained upbeat, with the Nasdaq and the S&P 500 both taking out previous lifetime high levels. Crude oil remained steady around $70 and precious metals shined with Silver making new lifetime high in the domestic markets.

Geopolitics has been playing a very crucial role in market movements over the past few weeks. There is some anxiety around the news of China amassing its naval forces around Taiwan and staking its claim on that territory. 2025 is surely a roller coaster ride for everyone, more so for the equity markets.

Kotak Investment Advisors – 12-Month Outlook: 1. Expects financials, capital goods, and select midcap pharma to outperform over the next year. 2. Raised mid/small-cap exposure from 25% to 30% on hopes of earnings rebound post tepid FY25. 3. Maintains 80:20 allocation between domestic and international equities. 4. Overweight on financials, favoring well-managed NBFCs; expects consumption recovery backed by fiscal support and better monsoon. 5. Positive on Gold and Silver for portfolio diversification.

FIIs have been on the wait and watch mode for emerging markets mostly on account of uncertainty on Tariff front. Q1 earnings season kicked off with weak IT result. FIIs have pulled out Rs. 5000 cr so far in July. SEBI crack down on Jane Street has dented F&O volumes.

Let's now take a look at the charts and try to figure out what lies in store for the coming week.

As we can see, Nifty, after spending time in a range, broke it on the downside. It closed just a tad below 25150 breaking important support around 25200. Coming week looks a bit grim for the markets. Nifty should find support around 25000-24900 range. Immediate resistance for Nifty lies around 25350 while 25500 may prove to be very difficult to cross in immediate future. A close below 24900 may lead to further downside towards 24500.

BankNifty is also looking weak for the coming week. It managed to close above its support near 56700. A close below 56700 may lead it towards 56000 which, should act as a strong support. 

Evry dip in the markets is an opportunity for investors to accumulate good quality stocks, particularly in select sectors. Traders need to adhere to strict stop losses and be nimble footed. Markets should provide opportunities on either side.

“One of the very nice things about investing in the stock market is that you learn about all different aspects of the economy. It’s your window into a very large world.”  - Ron Chernow

Stay Invested!!!

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk. 

Week Ending July 4th 2025

Dear patrons, during the slow news week the markets were also quite dull in activity. Indices spent the entire week consolidating in a tight range of 25650-25350. Higher levels saw supply while demand emerged at lower levels along with short covering. During the week markets closed in the red for three days and managed to clock positive closing on two days.

In yet another move towards improving risk management in the World's largest derivatives market the SEBI has proposed a plethora of measures, The new proposals touch everything from Open Interest calculations to position limits, ban period rules along with pre-open and post- closing market session for Futures. These measures are likely to improve volumes and reduce volatility.

Globally the US markets rallied last week. Both the S&P 500 and Nasdaq made multiple lifetime highs during the week while the Dow Jones touched multi month highs. European peers were also quite strong and inched northwards. Asian markets were a mixed bag over the past week rallying on odd days and correcting on even days.

Back home, Foreign Investors were sellers consistently over the week while Domestic Investors were buyers. As the deadline for American Tariffs draws closer anxiety among investors is on the rise. The Indian Economy is however expected to remain strong and show a robust growth of around 6.5% in FY26, India is eyeing record-breaking exports in FY26, especially on account of signing FTAs (Free Trade Agreement) with various countries. India's Services PMI rose to a 10-month high of 60.4 in June 2025 on the back of strong domestic demand, higher export orders and steady job creation.

With Q1 FY26 coming to end, we will be entering the corporate results season from the coming week. IT giant TCS will kick start with results on 10th July. Results are likely to be good this time around and we should see sharp growth in select sectors. Overall, it should be satisfactory season for Indian corporates. Markets will see more stock specific action reacting to results, while the indices may remain steady.

Let us now take a look at the charts and try to figure out what lies in store for the coming week on the benchmark indices front.

Nifty spent entire last week consolidating and consistently closing above its 8 EMA (Exponential Moving Average), which, should act as support going into the results season next week. Breach of 25400 may lead Nifty to 25200. A close above 25600 is needed for Nifty to move towards 25800 and above towards new lifetime high levels. Corporate results will play a pivotal role in the movement of Nifty in the coming days. Stock specific action will prevail compared to the indices.

BankNifty was also in a range for the week albeit making new lifetime highs. BankNifty has been and still looking stronger than the Nifty. BankNifty should find support near 56900-57000. Strong support for BankNifty is placed around 56500. As long as BankNifty holds above 56500 it remains "Buy-On-Dips".

Select sectors have been outperforming the broader markets and are likely to persist in the same vein. Select MidCap stocks are looking extremely attractive and are likely to outperform the markets. Investors should look to accumulate good quality stocks in every fall. Markets are likely making a launchpad for a leap towards new highs. 

Stay Invested!!!

“History provides a crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.” ~ Shelby M.C. Davis

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk. 

Week Ending June 27th 2025

Dear patrons, the Indian markets saw a stupendous rally in the week gone by. Benchmark Nifty ended the month of June with a 4% gain over previous month while the BankNifty posted a 3% MoM (month on month) gain. Almost all sectoral indices also closed in the green for the week. Easing geopolitical tensions and falling Crude Oil prices have prompted investors to shift to "Risk On" mode. In the "Risk On" mode we may see some softening in precious metal prices along with commodity prices.

Indian markets remained resilient during the turmoil around the globe be it geopolitical or economical. A lot of credit for the Indian markets' stability goes to the Domestic Institutional Investors. Rising confidence in Mutual Funds by retail investors has transformed into rising AUMs (Assets Under Management) for various AMCs (Asset Management Companies). Big corporates are also playing along by parking their idle funds with respective AMCs to boost Domestic strength.

Globally, the US markets were very buoyant after announcement of cease fire in the middle East and release of Fed statement. The Federal Reserve chair promised two more cuts in the year irrespective of inflation and state of economy. The statement fueled rally in all indices in the US, with the S&P 500 rising to a lifetime high. European markets were also largely positive. As the deadline for implementation of tariffs draws closer, we may see some jitters in the markets.

Back home, falling Crude oil prices along with falling Dollar index augurs well for the Indian markets in the near future. Fall in Crude prices reduces India's import bill thereby reducing the Current Account Deficit, which in turn pushes Capital Expenditure by Government northwards. In fact, the CAD for January-March 2025 quarter swung into surplus, clocking nearly $14 bn in the positive, that too amid 3 wars.

Let us now try to figure out what lies in store for our markets in the coming week.

As we can see Nifty moved higher gaining more than 2% over the week. A lot of this up move can be attributed to short covering on account of the June series derivatives contract expiry. Nifty achieved 25500 as mentioned in the previous blog and surpassed our target to close a tad below 25650. For the coming week Nifty may face resistance in the 25800-26000 range. 26150 appears to be the target for this rally and a close above this level may trigger further up move towards new lifetime high levels. On the downside 25200-25000 becomes a strong support zone for Nifty. As long as 25000 holds it remains a "Buy-On-Dips" market.

BankNifty has been the early mover in this rally. It is comfortably placed at a lifetime high ready for further push in the no resistance zone. Banks and NBFCs have remained flavor of the markets for some time now and are expected to remain top picks for institutions, thereby lending strength to BankNifty to move further ahead. 57800-58000 should act as immediate resistance. Close above 58000 may lead BankNifty towards 60000 in a hurry. On the downside 56400-56200 should act as support.

Markets are looking strong and a surplus CAD resulting in more capex should provide more impetus for further up move. Extension in tariff deadline is on the cards, which again, is a positive for the markets. Investors should look to accumulate good quality stocks in select sectors. 

Stay Invested!!!

“Everyone has the brainpower to make money in stocks, not everyone has the stomach.” ~ Peter Lynch

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk. 

Week Ending June 20th 2025

Dear patrons, the Indian markets have been quite volatile over the last few days. Geopolitical tension has played a key role in this volatility. Situation across the middle East remains extremely capricious casting a shadow of war over the entire globe.

Indian markets have a lot to cheer as well as worry about. In an unprecedented move the Reserve Bank of India cut interest rates by 50 bps along with a staggered CRR (Cash Reserve Ratio) cut of 100 bps. The RBI has been very aggressive since the new Governor took over. It has pushed huge liquidity in the system through the use of OMOs (Open Market Operations, a whopping 3,00,000 crores), Interest Rate cut and CRR cut. RBI is eyeing impetus to GDP growth. Inflation has played a key role in RBI's bold decision, by touching a multi-year low. Worry for the markets is the ongoing tension in the middle East. Things might spiral into a full-blown war any time. A full-scale war is not good for the World as it may put pressure on Crude, which has already moved towards $80/barrel. Rising crude oil is extremely worrisome for a developing economy like India.

The US markets over the last week remained a mixed bag. The Federal Reserve held status quo in interest rates and there is possibility of two rate cuts during the year. These rate cuts however depend on inflation, which is not showing any signs of abetment. 

Coming back to Indian markets, we saw some sharp up move on Friday. Benchmark Nifty closed well above its psychological resistance of 25000.Domestic institutions have been buying Indian stocks consistently for last three weeks. Foreign investors are slowly but surely turning buyers in the Indian markets. Let's take a look at the charts and try to figure out what lies ahead for the markets in the coming week.

As we can see, Nifty surged past the all-important level of 25000 on Friday. This up move has come after a period of range bound activity over last couple of weeks. In all probability Nifty has broken out of its range and is headed towards 25500. As long as Nifty remains above 24800 it is a "Buy-On-Dips" market. A close below 24800 should open doors for further fall towards 24000. Coming week being expiry week for May derivatives contracts, may see a lot of volatility and a bout of short covering may propel Nifty towards its target in a jiffy.

BankNifty led the rally in the markets. However, it looks a bit fatigued right now. A move above 57000 is needed for BankNifty to scale further high levels. Immediate resistance for BankNifty is placed in 56300-56600 range. Move beyond 56600 should open the doors for 57800-58000 on BankNifty.

A word of caution for traders though. Traders MUST adhere to strict stoop losses. The moves can be sharp and wild given the expiry week as well as news flow from Isreal-Iran skirmish. Markets will provide ample opportunity to trade on both sides. Investors should look to accumulate good quality stocks in every dip. Select sectors are likely to outperform others with big margin, allocating more weightage to such sectors in the portfolio would be more rewarding over a period of time.

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk.