US President Donald Trump on Friday said that America would continue its special friendship with India. Prime Minister Narendra Modi responded positively, which markets believe could help ease tensions in bilateral relations. This is seen as a supportive factor for the market’s upward movement.
At the same time, reports suggest that the US is considering imposing taxes on Indian IT companies. Such mixed signals – both favourable and adverse – are likely to reflect in market movements. As in recent days, this could also cause weakness in the markets.
The excitement around GST reduction has slightly cooled. The industry is now unsure whether the festive season will bring the much-needed boost in sales to offset nearly a month-long slump.
Meanwhile, OPEC’s decision to increase crude oil production fell short of expectations, pushing oil prices up by 1.5%.
Gold is edging closer to $3,600 an ounce internationally, while in Kerala, the sovereign price is nearing ₹80,000.
In derivatives, Gift Nifty closed at 24,825.50 on Friday night. On Saturday morning, it rose to 24,944 before easing slightly. This suggests that Indian markets are likely to open on a positive note today.
Pressure on IT companies
In recent days, Trump supporters in the US have spoken out against outsourcing and the expansion of global capability centres (GCCs) in lower-wage countries such as India. They argue that these practices have reduced domestic employment opportunities. Demands have surfaced to impose taxes on outsourcing and GCC operations. A government spokesperson in Delhi confirmed that discussions with senior US officials on the matter are under way, and the reaction could emerge today.
The US labour market was notably weak in August. Against an expectation of 75,000 jobs being added, the actual increase was only 22,000. July had seen just 73,000, and revised data for the preceding two months showed a reduction of 258,000. Average monthly job growth during May–August has dropped to 29,000, compared with 168,000 in 2024. This is the weakest phase since the Covid-hit year of 2020.
Unemployment has climbed to 4.3%. Earlier this month, Trump dismissed the head of the Bureau of Labour Statistics over the revision of employment figures, appointing an interim chief whose August report has now been published. The steep fall in job growth has raised recession fears.
As a result, the probability of the US Federal Reserve cutting interest rates this month has risen to 100%. The market firmly expects a 0.25% reduction at the September 16–17 meeting of the Federal Open Market Committee. Some even believe there could be a 0.5% cut. Any such easing would encourage capital inflows into equities.
European markets fell on Friday as weak US jobs data heightened recession worries. The euro and pound gained. Markets expect the French cabinet could collapse in today’s vote, adding to political instability. In Britain, markets fear that the November budget could bring higher taxes. The resignation of deputy prime minister and finance minister Angela Rayner over tax evasion on a property purchase has led to David Lammy assuming both roles. Pakistani-origin Muslim woman Shabana Mahmood has become home secretary. Markets are not anticipating a particularly positive response to these developments.
Despite hopes of interest rate cuts, US equities declined on Friday as weak job growth overshadowed sentiment. The Dow Jones Industrial Average fell 220.43 points (0.48%) to close at 45,400.86. The S&P 500 lost 20.58 points (0.32%) to 6,481.50, and the Nasdaq Composite dipped 7.31 points (0.03%) to 21,700.39.
US futures are showing mild gains this morning – Dow up 0.11%, S&P up 0.17%, and Nasdaq up 0.33%. Asian markets are mixed. Japan’s Nikkei surged 1.75% after Prime Minister Shigeru Ishiba announced his resignation, sending the yen lower. Markets in Korea and Australia slipped.
Indian markets slipped into uncertainty on Friday. The relief from GST concessions had already been factored in, leaving little fresh momentum. The Sensex dropped 610 points from its intraday high, while the Nifty shed 90 points before closing almost flat. The Sensex ended down 7.25 points (0.01%) at 80,710.76, while the Nifty rose 6.70 points (0.03%) to 24,741. Bank Nifty closed 7.90 points higher at 54,114.55. Mid-cap and small-cap indices gained modestly.
IT, FMCG and realty shares dragged the market. The rumour that the Trump administration might impose taxes on services provided by Indian IT firms rattled investors.
Breadth was mixed: on the BSE, declines (2,090) outnumbered advances (2,014), while on the NSE, gainers (1,643) outpaced losers (1,368).
The Nifty closing above 24,700 keeps bullish hopes alive, though 25,000 remains a tough resistance. If support at 24,700 is lost, the index could slip to 24,400. Today, support levels are seen at 24,650 and 24,600, while resistance lies at 24,810 and 24,940.
After Thursday’s profit-taking, gold resumed its rally. Weak August jobs data has strengthened expectations of a Fed rate cut on September 17.
In spot trade, gold surged $40.70 on Friday to close at $3,587.30 an ounce – a weekly gain of 3.52%. It briefly touched $3,639.80 before easing. Early this morning, it rose to $3,597.50 before pulling back. Markets expect prices to climb above $3,600 again.
In Kerala, 22-carat sovereign gold rose ₹560 on Friday to ₹78,920, and another ₹640 on Saturday to a record ₹79,560. Silver prices, however, edged lower to $40.77 an ounce.
Industrial metals advanced: copper rose 0.71% to $9,880.95 per tonne, aluminium gained 0.40% to $2,610.82, while nickel, lead, zinc and tin also firmed. Rubber prices increased 0.06% to 175 cents per kg. Cocoa climbed 0.45% to $7,237.64 per tonne, while coffee fell 0.27% and tea dropped 3.18%. Palm oil was unchanged.
The dollar index closed the week lower at 97.77 but edged up to 97.91 this morning. The euro rose to $1.1712, the pound to $1.3496, while the yen weakened to 148.47 per dollar.
US 10-year treasury yields fell to 4.099% as prices rose.
The rupee closed weaker at 88.26 per dollar after briefly touching 88.37. China’s yuan strengthened to 7.13 per dollar.
