Tariffs Bite, But Will India Blink?

Markets Overview

Markets this last week have been quite disappointing. Until the last day of August 27, there was an expectation that some relief might come on the tariff front, just as the US administration has done earlier by delaying tariff deadlines. But this time, that did not happen. The Indian government also held firm, refusing to bow down. Interestingly, in the last two days after the tariff was applied, the government narrative has shifted slightly, hinting at reconciliation and a possible middle ground. Whether that helps in the coming weeks remains to be seen.

The GDP numbers that came out were decent. While 17 out of 20 sectors showed slower growth, the overall GDP figures looked reasonably stable. So while sectoral momentum has cooled, the broader economy still seems to be holding up.

Nifty, however, had a poor week, falling 1.78%. It was a short trading week. After starting the decline on Friday, August 23, Monday saw some relief, but Tuesday, Thursday, and Friday offered no respite. The index now resembles a head-and-shoulders pattern, raising concerns that without some positive news soon, it could break below its neckline.

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The Nifty closed down 0.3% today. There was some recovery during the day, but by closing, the index was again near the lows. After being beaten down for the last five-six sessions, the absence of late recovery is a worrying sign. Nifty is now near the 24,400 zone, which should act as support next week.

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