Gold breaks out as Nifty takes support!

Markets Overview

This was a decisive week where relations with the US have clearly shifted. It is unlikely that ties will return to what they were before. The week was dominated by strong narratives from both sides. The US has virtually demanded that India give up any trade with Russia, step away from the BRICS alliance, and lend full support to the US economy. Such demands make it very difficult to find a solution after so much has already been said on both sides, although one can never rule out surprises in geopolitics.

Markets, however, seem to have largely discounted this factor. The 50% tariff is now seen as part of the baseline, and attention is turning to October 14 when the US government’s appeal in its Supreme Court will be heard. Whether that passes or not will be a key moment, as will any backup plans the US administration may roll out to impose additional tariffs.

Adding to the uncertainty, there were also rumors—though not yet confirmed—that tariffs on Indian IT services could be considered. Such a move would be highly disruptive, especially for India’s export-heavy IT sector. Beyond tariffs, concerns are also growing about the US economy itself. Recent jobs data has been poor, with negative job growth and rising unemployment. Historically, every time US unemployment reaches current levels, it has signaled a recession. That possibility poses risks to global markets, including India. Against this backdrop of multiple headwinds, only a dramatic fall in the dollar index might provide tailwinds for emerging markets.

Despite all these challenges, it’s worth remembering that markets can always surprise. Just as after COVID, when no one expected such a swift rally, unexpected turns remain possible. The lesson is clear: asset allocation remains crucial. Even if markets are not delivering immediate returns, staying invested and diversified is the only way to be prepared for sudden shifts.

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The stock market on 5th September moved in a yo-yo manner with sharp ups and downs. The day began with strong rumors that the US might impose tariffs on IT services, which pushed IT stocks sharply lower. Later, Bloomberg clarified that no such news was confirmed, but the nervousness in the market continued as traders awaited further signals from the US, especially with a key speech expected from the President.

On the domestic front, the GST impact was already factored into prices in the previous sessions, leaving the market with little new trigger. The overall mood stayed indecisive, but importantly, the market has not broken key levels yet, which is still a positive sign.

Rebalance Update for the week