Market Ahead: Trump's Reciprocal Tariffs, PMI Data to Steer Investors in Holiday-Shortened Week

Investors are bracing for the potential impact of the United States’ reciprocal tariff measures set to take effect on April 2. Market watchers will closely monitor the implementation of these tariffs.

Investor focus is gradually shifting towards corporate earnings, which will soon provide a clearer picture of earnings recovery and business performance.

Source : Freepik

Equity market sentiment in the upcoming holiday-shortened week will be shaped by global trade developments, foreign investor activity, and key macroeconomic indicators, analysts noted.

The stock markets will remain closed on Monday due to Eid-Ul-Fitr. Domestically, macroeconomic indicators such as the Purchasing Managers' Index (PMI) figures for the manufacturing and services sector will be released in the week. This will also be keenly tracked by experts as it is expected to provide fresh insights into economic activity.

Additionally, US job opening data will be closely scrutinised for signals on economic momentum, reported PTI.

Trump's Reciprocal Tariffs in Focus

Investors are bracing for the potential impact of the United States’ reciprocal tariff measures set to take effect on April 2. The US has threatened to impose tariffs on several key trading partners, including India, leading to heightened anticipation over the official announcement.

“All eyes are now on Trump's April 2 tariff announcement,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd.

Market watchers will closely monitor the implementation of these tariffs and their broader ramifications on global trade flows. “With the upcoming holiday-shortened week, market participants will turn their attention to global developments in the absence of major domestic triggers,” said Ajit Mishra, SVP (Research) at Religare Broking Ltd.

Foreign Fund Flows and Economic Indicators in Spotlight

The direction of foreign institutional investor (FII) flows will be a key determinant of market trends. “Going forward, the trend in FII flows will depend mainly on Trump's reciprocal tariffs expected on April 2. If the tariffs are not severe, the rally may continue,” said V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. He highlighted the recent shift in FII strategy, noting a move from sustained selling to modest buying in recent weeks.

Currency movements and commodity prices will remain key external factors influencing domestic markets. Analysts suggest tracking the rupee-dollar exchange rate and the performance of global crude oil benchmark Brent crude, as these elements could add volatility to trade.

Earnings Season on the Horizon

Investor focus is gradually shifting towards corporate earnings, which will soon provide a clearer picture of earnings recovery and business performance. “This week is expected to offer greater clarity on tariff developments, enabling investors to assess their impact on the global economy,” said Vinod Nair, Head of Research at Geojit Investments Ltd.

Market Performance Last Week

Last week, the BSE benchmark index, Sensex, advanced by 509.41 points, or 0.66 per cent, while the NSE Nifty50 gained 168.95 points, or 0.72 per cent. For the 2024-25 fiscal year, the BSE Sensex surged by 3,763.57 points, marking a 5.10 per cent rise, while the Nifty climbed 1,192.45 points, reflecting a 5.34 per cent increase.

The overall market capitalisation of BSE-listed companies witnessed substantial growth, soaring by Rs 25,90,546.73 crore to reach Rs 4,12,87,646.50 crore ($4.82 trillion) in FY25.

As the new fiscal year unfolds, investors will be closely evaluating global policy shifts and domestic economic indicators to gauge market direction in the weeks ahead.