Markets Ahead: Investors Awaiting RBI MPC's Rate Decision As Donald Trump's Tariffs Dampen Sentiment

At the heart of market jitters are the US government’s aggressive tariff moves and the upcoming interest rate decision by the RBI, both of which are expected to shape investor sentiment ahead.

A highly turbulent week lies ahead for investors, with global markets bracing for volatility triggered by a mix of domestic and international developments. At the heart of market jitters are the US government’s aggressive tariff moves and the upcoming interest rate decision by the Reserve Bank of India (RBI), both of which are expected to shape investor sentiment in the days to come.

According to analysts, heightened anxiety over the economic fallout from the US reciprocal tariff regime is likely to dominate headlines. "Investors fear that a full-blown trade war will impact global trade and economic growth," market experts observed, underlining concerns that such measures could send shockwaves through the global financial system, reported PTI.

Global Cues Keep Markets on Edge

With the US President's recent decision to enforce wide-ranging tariffs, fears of a global recession are once again resurfacing. The financial markets responded sharply, with US equities experiencing their worst week since 2020. The S&P 500 and Nasdaq each shed more than 10 per cent over just two sessions, as investors reacted to steep import duties — including a 10 per cent baseline tariff, 25 per cent on automobile imports, and targeted levies on most trading partners.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, explained, “The trend of FPIs turning buyers in March changed in early April when FPIs turned sellers again. A major trend reversal in global stock markets happened after President Trump announced reciprocal tariffs on April 2nd.” He added that the tariffs were “much steeper-than-expected” and flagged concerns around rising US inflation and potential stagflation.

China’s Consumer Price Index (CPI) numbers for March, due Thursday, along with UK’s GDP data on Friday, will further add to the global economic narrative. Meanwhile, the release of the FOMC (Federal Open Market Committee) minutes and March inflation data from the US are expected to be key triggers for market direction.

RBI Policy Decision, Corporate Earnings in Focus

On the domestic front, attention will be squarely on the RBI’s monetary policy announcement on April 9, where markets are anticipating a possible 25 basis points rate cut. This comes alongside the release of India’s industrial and manufacturing production figures — both of which will offer clues about the country’s economic trajectory.

Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services, noted that the fourth-quarter earnings season also kicks off this week, with TCS scheduled to report results on April 10. “This week, Indian markets are expected to be volatile on the back of concerns over the impact of the US reciprocal tariffs and potential announcements of further sector-specific tariffs during the week,” he said.

Khemka added that investors would also be closely tracking the US and India’s March CPI data, as well as movements in crude oil prices, the rupee-dollar exchange rate, and foreign institutional investor activity.

Meanwhile, Friday’s sell-off in domestic equities reflected broader global concerns. The BSE Sensex fell by 2,050.23 points or 2.64 per cent, while the NSE Nifty slid 614.8 points or 2.61 per cent over the week.

“Investors fear Trump's reciprocal tariff policy will fuel recession and drive inflation in the US going ahead and will also engulf other key economies,” warned Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

With markets closed on Thursday for Shri Mahavir Jayanti, the shortened trading week may still prove action-packed — and uncertain — as investors weigh a complex mix of data releases, policy decisions, and global macroeconomic shifts.