India has suffered another setback on the tariff front after US President Donald Trump declared that no trade talks with India will take place until the dispute over Russian oil purchases is resolved. The announcement puts to rest hopes of any potential agreement before the punitive 25 percent tariff takes effect on August 27.
In the meantime, US Commerce Secretary Howard Lutnick has announced that the trade agreement with China will be extended by 90 days—another move seen as a diplomatic and trade setback for India.
Following the announcement of higher US tariffs, exporters across categories—from textiles and gems & jewellery to coir products and seafood—have begun facing widespread order cancellations. US importers are shifting purchases to countries with lower duties.
Foreign institutional investors (FIIs) continued to offload shares, raising concerns about how long domestic financial institutions can sustain large-scale buying. This uncertainty may weigh on trading sentiment.
Markets are also closely watching the upcoming Trump-Putin summit in Dubai next week, hoping for a temporary truce in the Ukraine conflict. A ceasefire could ease pressure on Indian imports of Russian oil.
The Gift Nifty closed Thursday night at 24,633.50, climbed to 24,658 in early Friday trade, and then edged slightly lower, indicating a subdued start for Indian equities.
European markets closed higher on Thursday, except in the UK, driven by hopes that the Trump-Putin summit could pave the way to ending the Ukraine war. The Bank of England’s 0.25 percent rate cut boosted the pound by 0.5 percent, which weighed on UK stocks. Switzerland’s market gained 0.9 percent despite facing a 39 percent tariff. Swiss President’s failed attempt to meet Trump in Washington also made headlines, while the Swiss franc strengthened.
US markets rose in the morning but reversed later in the day as investors booked profits from recent gains. Weekly jobless claims came in better than expected, initially lifting the mood. However, Eli Lilly’s 14 percent drop after a failed obesity drug trial and Caterpillar’s grim business outlook dragged down sentiment.
Despite a 100 percent tariff on semiconductor chips, the US government clarified that domestically produced chips would be exempt, helping tech stocks recover.
The Dow Jones fell 224.48 points (0.51 percent) to close at 43,968.64. The S&P 500 dipped 5.06 points (0.08 percent) to 6,340.00. The Nasdaq Composite rose 73.27 points (0.35 percent) to 21,242.70.
Futures indicate modest gains: Dow up 0.15 percent, S&P 0.18 percent, and Nasdaq 0.21 percent. Asian markets are mixed, with Japan’s Nikkei rising 2 percent to a record high above 3,000 on the Topix index. Australian and South Korean markets slipped, and Chinese and Hong Kong markets opened lower.
Indian equities overcame early losses to end in the green on Thursday. Despite falling nearly 700 points in early trade, the Sensex bounced back as domestic financial institutions stepped in with strong buying. The rupee also recovered after early weakness, easing fears of a sharp depreciation.
Markets are now pinning hopes on a resolution to the Ukraine conflict at next week’s Trump-Putin meeting, which could remove the overhang on Russian oil imports.
Export-oriented textile companies with US exposure fell, but those with diversified manufacturing bases like Gokaldas Exports gained. Kitex Garments declined 5 percent. Pharma stocks outperformed.
Barring realty and oil & gas, all sectors ended higher, led by IT, media, and pharmaceuticals.
The Nifty, after swinging nearly 300 points, closed 21.95 points (0.09 percent) higher at 24,596.15. The Sensex rose 79.27 points (0.10 percent) to 80,623.26. Bank Nifty added 110.00 points (0.20 percent) to finish at 55,521.15. The Nifty Midcap 100 climbed 188.55 points (0.80 percent) to 56,938.30, while the Smallcap 100 rose 30.05 points (0.17 percent) to 17,692.65.
Market breadth remained negative: On the BSE, 1,751 stocks rose while 2,297 declined. On the NSE, 1,421 gained and 1,554 fell. There were 36 stocks at 52-week highs and 101 at 52-week lows. As many as 51 hit upper circuits, while 87 hit lower circuits.
FIIs sold equities worth ₹4,997.19 crore in the cash market on Thursday, while domestic funds bought stocks worth ₹10,864.04 crore.
Momentum indicators for the Nifty remain bearish. Though the index closed just above its 100-day exponential moving average (EMA), it remains below the 20-day and 50-day EMAs. Technical analysts expect consolidation to continue. Key support is seen at 24,415 and 24,345; resistance may emerge at 24,635 and 24,700.
Gold prices rose on Thursday, supported by higher weekly jobless claims in the US and continued central bank buying. Spot gold gained $27.10 to close at $3,397.50 per ounce and touched $3,407 before dipping slightly to $3,396 in early trade on Friday.
In Kerala, gold prices rose ₹10 per sovereign to a new high of ₹75,200. Prices are expected to rise again today. Silver stood at $38.14 per ounce.
Rubber fell 0.24 percent internationally to 167.20 cents/kg. Cocoa jumped 1.91 percent to $8,632 per tonne. Coffee rose 1.50 percent, while tea declined 0.73 percent and palm oil dropped 0.61 percent.
The dollar index, which closed Thursday at 98.40, dropped to 98.06 in early Friday trade. The euro strengthened to $1.1665, while the pound weakened to $1.344. The yen rose to 147.20 per dollar. US 10-year bond yields remained flat at 4.24 percent.
The rupee firmed up on Thursday, aided by the Reserve Bank of India's strong market presence and a weaker dollar. It closed 3 paise higher at ₹87.70.
However, the rally may not sustain, with potential implications from declining exports to the US due to high tariffs. A prolonged trade war could curb foreign investment inflows and widen the current account deficit. The Chinese yuan held steady at 7.18 per dollar.
Brent crude closed Thursday at $66.43 and inched up to $66.45 on Friday morning. WTI stood at $63.87 and Murban crude at $69.20. Natural gas prices remained mostly flat.
Cryptocurrencies surged following reports that the US may allow 401(k) retirement accounts to invest in crypto assets. Bitcoin rallied past $117,000, and Ether surged over 6 percent to above $3,900.
