GST Boosts meet Geopolitical Risks ?

Markets Overview

Nifty opened this week with a huge gap, driven by the reorganization of GST segments and a major boost to domestic consumption. That momentum lasted for about three to four sessions before geopolitical risks began to weigh on sentiment. By midweek, narratives from the American President and his team made it clear that they would not relent on tariffs against India.

The tension is especially sharp as India looks to deepen trade ties with Russia and even open up further with China. This is rubbing salt in American wounds, and there is a risk that the US administration may respond with coercive measures against India. These could take the form of tariffs or outright bans on certain trade flows. For now, the two sides are at an impasse, and until some middle path is found, markets are unlikely to take off in any meaningful way.

However, one piece of positive news came yesterday with US Fed Chair Jerome Powell hinting at an almost certain interest rate cut in September. This has fueled equity markets in the US, lifted precious metals, and is expected to benefit emerging markets like India as well. While the India-US trade conflict remains a cloud, easier monetary policy could soften its impact in the weeks ahead.

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The week ended on a weak note as the top end of the market completely gave up. Nifty has almost surrendered all the gains it had made over the last four sessions, at least from Monday’s open. Adding to this nervousness is the talk of new tariffs on the 27th of August. The additional tariffs that were earlier announced for India have not been rolled back, and the US administration has been hinting that they will be applied.

Rebalance Update for the week