Trump's threat over American IT companies in India hiring Indians rattles markets

US President Donald Trump’s threat against US IT firms in India hiring domestically caused Indian markets to tumble on Thursday. His statement that countries without a trade deal with the US could face tariffs of up to 50 percent further dampened sentiment.

While US futures were trading higher on Friday morning, Asian markets were broadly lower. Indian equities also opened weak, with IT companies reporting muted earnings growth. Commerce Minister Piyush Goyal’s assertion that India would receive a fair deal from Trump has not found much traction in the market.

Powell to stay as Fed chief

Late Thursday, Trump visited the US Federal Reserve’s headquarters, where he commented on the cost of a new building. Fed chair Jerome Powell later corrected Trump’s remarks. Trump clarified that Powell would not be removed from his post, and added that Powell, who retires next May, would “do the right thing”. Markets interpreted his comments as a call for interest rate cuts. The Fed is not expected to cut rates next week but might do so in September.

In the derivatives market, Gift Nifty closed at 24,968.00 on Thursday night, briefly rising to 24,994 on Friday morning before declining again. This suggests a weak start for Indian equities.

European markets closed higher on Thursday, with indices rising across the board except in France. Hopes that a trade deal with the US—with tariffs capped at 15 percent—could be finalised lifted sentiment.

Mixed close for US indices

On Thursday, US markets moved in different directions. The S&P 500 and Nasdaq both closed at record highs, helped by strong earnings from Alphabet, Google’s parent company. Tesla shares plunged nine percent after reporting a sixth consecutive monthly decline in sales. Reports said Tesla sold 80 percent of its bitcoin holdings at a steep loss. IBM’s disappointing results dragged the Dow into the red.

The Dow Jones fell 316.38 points (0.70 percent) to close at 44,693.91. The S&P 500 edged up 4.44 points (0.07 percent) to 6363.35. The Nasdaq Composite rose 37.94 points (0.18 percent) to 21,057.96.

US futures were trading higher on Friday: Dow futures up 0.25 percent, S&P 500 up 0.24 percent, and Nasdaq futures up 0.22 percent, helped by strong results from Intel and other firms.

Asian markets were broadly lower, with declines in Japan, South Korea, Australia and China.

IT drag sinks Indian market again

Trump’s comments about ending job creation by American IT firms in Indian domestically triggered fresh selling in Indian equities. Concerns were amplified by news of Trump’s visit to the Fed. Gains from Wednesday were entirely wiped out. The Nifty IT index fell 2.21 percent, with FMCG and realty also weak. Public sector banks and pharma and healthcare stocks ended higher. Foreign institutional investors (FIIs) remained net sellers on the weekly settlement day.

The Nifty closed 157.80 points (0.63 percent) lower at 25,062.10. The Sensex shed 542.47 points (0.66 percent) to close at 82,184.17. Bank Nifty dropped 144.40 points (0.25 percent) to 57,066.05. The Nifty Midcap 100 index fell 346.40 points (0.58 percent) to 58,960.70, while the Smallcap 100 index declined 206.40 points (1.09 percent) to close at 18,686.80.

The advance-decline ratio remained negative on the BSE, with 1,542 stocks advancing and 2,517 declining. On the NSE, 1,109 stocks rose and 1,860 declined.

On the NSE, 72 stocks hit 52-week highs, while 29 hit 52-week lows. As many as 68 stocks were locked in upper circuits and 54 in lower circuits.

FIIs sold shares worth ₹2,133.69 crore in the cash segment on Thursday, while domestic funds bought shares worth ₹2,617.14 crore.

Market participants expect the Nifty to remain rangebound unless it moves decisively above 25,250. Resistance is seen at 25,200 and 25,330, while support lies at 25,020 and 24,880.

Company results, news highlights

Canara Bank reported a 21.67 percent year-on-year rise in net profit to ₹4,752 crore in Q1. Net interest income fell 1.7 percent to ₹9,009 crore, while other income surged 32.7 percent to ₹7,060.48 crore. Gross NPA declined from 4.14 percent to 2.69 percent, and net NPA from 1.24 percent to 0.63 percent.

Indian Bank also posted higher profits, with net profit up 23.69 percent at ₹2,973 crore. Net interest margin fell from 3.44 to 3.23 percent. Net interest income rose 2.93 percent to ₹6,359 crore. Gross NPA declined from 3.77 percent to 3.06 percent, and net NPA from 0.39 to 0.21 percent.

REC’s Q1 net profit rose 29 percent to ₹4,465 crore, while net interest income jumped 37.6 percent to ₹5,666 crore.

Shares of Indian Energy Exchange (IEX) plunged 29.58 percent after the electricity regulator proposed an open market policy allowing other exchanges to benefit. IEX, a dominant player in power trading, could lose its monopoly. Despite this, IEX reported a 25 percent rise in net profit in Q1.

SBI Life’s Q1 net profit rose 14 percent.

Adani Energy posted a turnaround with ₹512 crore in net profit after a ₹824 crore loss in the previous year.

Bajaj Finance reported a 22 percent rise in Q1 net profit, with a similar 22 percent increase in net interest income.

Coforge dropped 9.4 percent and Persistent Systems 7.7 percent after poor earnings. Coforge-backed Signity Technologies fell 9.7 percent. Shares sold by promoters were reportedly bought by Morgan Stanley.

Gold eases as trade tensions ease

Gold prices continued to decline as hopes rose for a resolution to the US-China trade dispute. On Thursday, gold fell $18.70 to close at $3,369 per ounce. On Friday morning, it edged up to $3,373.

In Kerala, gold prices fell ₹1,000 on Thursday to ₹74,040 per sovereign. Prices may drop further on Friday. Silver ended Thursday at $39.08 per ounce.

In international markets, rubber declined 1.05 percent to 169.50 cents/kg. Cocoa fell 2.46 percent to $8,232/tonne. Coffee rose 1.33 percent, while tea remained weak. Palm oil dropped 0.07 percent.

Currency market

The US dollar index edged up, closing at 97.38 on Thursday and rising to 97.51 on Friday morning.

In forex trade, the euro fell to $1.1746 and the pound to $1.3497. The Japanese yen weakened to 147.35 per dollar. US 10-year Treasury prices were steady, with yields holding at 4.39 percent.

Despite dollar weakness globally, the rupee remained flat, closing at 86.41 per dollar. China’s yuan stood at 7.15 to the dollar.

Crude oil gains; crypto volatile

Crude oil prices rose modestly. Brent crude traded at $69.23, WTI at $66.08, and Murban crude at $72.61 per barrel.

Cryptocurrencies remained volatile. Bitcoin slipped below $117,500, while Ether hovered near $3,650.