2025-08-29
Yes, new US tariffs on Indian goods, persistent foreign outflows, and weak market breadth have capped upside even as consumer shares edge higher on GST hopes into a closely watched GDP print and GST council signals, keeping the tone cautious despite selective strength.
US tariffs on Indian goods weigh on exporters and sentiment, keeping benchmarks muted after recent declines.
Foreign portfolio outflows pressure breadth and the rupee as traders avoid adding risk ahead of data.
Consumer shares find support on GST hopes, but leadership is narrow and lacks broad follow‑through.
India's equity benchmarks were muted on Friday after two down days as tariff headlines kept risk tight; modest consumer gains were offset by declines across most sectors. GIFT Nifty pointed to a slightly firmer start pre‑open, but intraday tone stayed cautious as event risk dominated flows and positioning. By mid‑morning IST, Sensex and Nifty 50 were roughly flat to slightly higher, reflecting a selective advance rather than broad participation. (Business Standard)
Nifty 50 today and Sensex today attempted early gains, but leadership was narrow with breadth lagging across sectors. Earlier in the tariff week, breadth weakened sharply, with most sectors in the red, showing how quickly participation thins when policy headlines dominate. Into Friday, consumer‑linked names showed relative strength on GST hopes, yet the move lacked a broad base across cyclicals and rate‑sensitives.
GIFT Nifty today signalled a modestly positive start ahead of the cash session, with a small pre‑open gain indicating a firmer tone at the bell. Traders treated the cue cautiously given domestic event risk and the US trade overhang, limiting aggressive follow‑through after the open.
New 25% US duties on Indian goods sharpened concerns across tariff‑sensitive supply chains, encouraging risk reduction and dampening dip‑buying appetite. Sentiment remained subdued post‑implementation, with only selective consumer support offsetting broader pressure in sector performance. For now, the tariff overhang is the dominant narrative for day‑to‑day flows, overshadowing constructive micro stories in specific areas.
Late‑month wraps cited about $3.3 billion of equity outflows in August that kept the broader mood subdued even when pre‑open signals looked marginally firmer. Foreign selling has tended to rise during global risk repricing and policy shocks this year, compounding local caution when external pressures build. The combination of tariff shock and foreign selling raises the hurdle for a clean rebound without clearer domestic catalysts. (Reuters)
Small‑cap stocks India and mid‑cap stocks India underperformed in Friday's session, with broader indices slipping around the tariff window as participation narrowed. Even as headline benchmarks hovered near flat to slightly positive, risk appetite further down the cap spectrum stayed constrained.
Consumer shares edged higher on hopes linked to the GST council meeting in India, with traders looking for tweaks that could support discretionary demand and margins if rate changes or clarifications land. GST‑related relief would intersect with tariff headwinds, potentially offsetting part of the external drag and steadying sentiment.
A late‑August Reuters poll put April–June GDP growth around the mid‑6% range (median near 6.7%), with uncertainty around investment momentum even as public capex holds firm. Industrial output improved in July to a four‑month high, aided by manufacturing, but overall signals still argue for cautious positioning into the GDP print. Together, these datapoints reinforce a measured tone around benchmarks as the market awaits confirmation.
Tariff‑sensitive areas underperformed across the week's choppy sessions, while selected consumer and private bank names offered pockets of resilience on policy hopes and balance‑sheet quality. By mid‑day Friday, sector boards were largely flat to modest, with rotation stalling where policy noise was highest, a setup that often fades into the close without better breadth. Without a broader advance/decline turn, rallies led by a handful of groups typically struggle to sustain.
Tariff fallout and equity outflows are likely to keep the rupee on the defensive into the data window, even if RBI presence tends to smooth intraday moves. Global cues tied to the US inflation release add cross‑asset noise for EM FX, reinforcing the case for measured positioning into month‑end.
Nifty 50 today: modest, time‑boxed gain by mid‑morning IST with narrow leadership.
Sensex today: similarly small rise intraday amid weak breadth and cautious tone.
Small‑/mid‑caps: underperformance versus large caps around the tariff window.
GIFT Nifty today: slight pre‑open positive cue with limited follow‑through after the open.
GIFT Nifty today follow‑through and whether breadth improves beyond consumer‑led gains to include cyclicals and domestic financials.
The GDP print and any revisions, to see if growth aligns with a mid‑6% handle or diverges enough to move policy and positioning.
Concrete signals from the GST council meeting in India, especially any rate rationalisation or clarifications that could lift discretionary consumption and services margins.
Updates on US tariffs on Indian goods, including potential exemptions or phased implementation that could ease the overhang on exporters.
Foreign outflows from India in August and early September flow trends judge whether selling pressure is stabilising.
US tariffs, persistent foreign equity outflows, and weak breadth are capping gains for the Indian stock market today, even as consumer names find some traction on GST optimism and pre‑open cues from GIFT Nifty indicate a tentative bid. Sustained upside likely needs either a cleaner domestic policy boost (clear GST outcomes, a supportive GDP print) or easing trade frictions; without that, rallies will struggle to broaden.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment, or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person.
