Domestic market-sentiment to remain upbeat amid easing US-China tensions; Fed in blackout as govt shutdown makes data updates uncertain

Stock markets across the world are expected to remain cautiously optimistic this week after President Trump confirmed that his meeting with Chinese President Xi Jinping is imminent.

“Indian markets had been caught in a thunderstorm of tariffs since April this year. Nevertheless, investors may remain upbeat in a holiday-shortened week ahead amid easing US-China trade tensions as tit-for-tat tariff actions are unlikely. 

“The US tariff rates are shooting up. However, authentic data reveals that more than 185 of 191 countries have so far avoided tit-for-tat tariff actions. The festival season will add strength to the prevailing positive undercurrent,” a leading New Delhi–based economist told The Free Press Journal Money on Sunday.

Preservation of trade is as an engine of growth. But trade barriers, according to the IMF, hurt both growth and productivity. 

Despite all the turbulence, an estimated more than 70% of world trade is still being conducted on most-favored-nation terms, Countries take their lowest bilateral tariff rate and offer it to all of their trading partners. 

Analysts from London said, the Fed is in blackout as the ongoing US government lockdown makes data updates uncertain. 

Despite worries over rising NPAs and high provisions, the domestic banking sector (especially PSBs), is likely to witness a marginal growth in credit. 

“Emerging market equities are expected to rally over the next 12 months, driven by earnings upgrades, demand for geographical diversification, and anticipated interest rate cuts from the Fed, along with a weaker dollar. 

“The MSCI EM index has risen for nine straight months, buoyed by AI optimism and strong buying from foreign investors. 

“We think the EM equity rally can extend, as macro trends and capital inflows remain supportive,” said Kamakshya Trivedi, chief foreign exchange and emerging markets strategist in Goldman Sachs Research. 

Goldman Sachs raised its forecast for the MSCI EM index of large- and medium-size companies across emerging markets. Analysts expect the index to reach 1,480 over the next 12 months.. Company earnings—which are expected to be the key driver of market returns in the near term—are forecast to grow 9% this yr and 14% in 2026.” 

The BSE and NSE will conduct a special Muhurat trading session tomorrow (beginning of Samvat 2082) for one hour between 1:45 pm and 2:45 pm, and on Wednesday, markets will remain closed for Diwali Balipratipada. 

The second quarter results from Hindustan Unilever, Colgate, SBI Life Insurance, and Dr Reddy’s Lab, are expected this week. Investors’ response to the working results of Reliance, IndusInd Bank,  HDBC Bank, etc. will also remain in focus this week. Marketmen expect the first phase of India–US trade deal to be signed by November.