FPJ News Service MUMBAI

Indian stock market is awaiting further clarity on the US President Trump’s 50% tariff shock. However, no sign of panic among smart investors and exporters. Will the additional 25% tariffs on Indian goods, linked to the import of Russian oil be implemented this week?

“It seems that the art of “no deal” will work well for India. Our policymakers had repeatedly said, India would sign a big deal with the US President. In fact, India was one of the first countries to confirm that it would negotiate a comprehensive trade deal with US,” a senior economist said on Sunday.

India’s (Department of Posts) decision to temporarily suspended postal services to the United States from today (August 25) has been closely watched by the White House, and DIIs and FIIs.  The move comes after changes in US customs rules, set to take effect from this Friday. 

“Despite external headwinds, domestic economic indicators offer a glimmer of hope. A record-high composite PMI and early signs of an urban demand revival are expected to support the market. 

The consumption sector is likely to benefit from a favourable monsoon, low interest rates, and indirect tax reliefs. Optimism gathered fresh momentum among Indian businesses, especially exporters after India’s sovereign rating upgrade by S&P. This week will be crucial for markets, with key releases including India’s GDP, along with US growth and inflation data—both of which will be closely tracked for insights into the global economic outlook,” said Vinod Nair,  head of research at Geojit Investments. Indication of a potential US Federal Reserve rate cut is expected to trigger optimism in the domestic equity market.  “With clarity on Aug 27 deadline still lacking, FII participation may remain subdued. Alongside this, macroeconomic data from the US, China, and India will also be closely tracked,” Santosh Meena, head of research at Swastika Investmart, said. 

Siddhartha Khemka, head of research, wealth management, Motilal Oswal Financial Services, said, “We expect Indian equities to remain supported by optimism around GST 2.0 reforms and domestic macro strength. Globally, clarity on US tariff actions against India and upcoming GDP data from both India and the US will shape investor sentiment”.  “Investors will monitor domestic economic data closely, including the IIP and GDP, which will serve as critical indicators of economic momentum,” Ajit Mishra, SVP, research, Religare Broking, said.

“This month, up to August 23, FIIs sold equity for Rs 25,564 crore through the exchanges taking the total selling this year up to Aug 23 to Rs 1,57,440 crore. FIIs have been sellers in the bond market, too. Since FIIs continue to invest through the primary market/ QIP route, the principal reason for selling through the exchanges is the high valuations in India relative to other markets, particularly emerging markets. FIIs were sellers in banking and financials, too, since this segment accounts for bulk of their assets under custody.   In the near term FIIs may reduce their selling since dollar is weakening responding to rate cut expectations from the Fed in September,” said Dr VK Vijayakumar, a veteran investment strategist.