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Domestic Market-Sentiment to Remain Upbeat Amid Easing US-China Tensions

Strategic Insights

— 2 min read

Stock markets across the world are expected to remain cautiously optimistic this week after President Trump confirmed that his meeting with Chinese President Xi Jinping is imminent. The Indian markets had been caught in a thunderstorm of tariffs since April this year, but investors may remain upbeat in a holiday-shortened week ahead amid easing US-China trade tensions. The festival season will add strength to the prevailing positive undercurrent, and analysts believe that emerging market equities are expected to rally over the next 12 months, driven by earnings upgrades, demand for geographical diversification, and anticipated interest rate cuts from the Fed.

Key Takeaways:

  • More than 185 of 191 countries have avoided tit-for-tat tariff actions, indicating a decreased risk of trade wars.
  • The festival season is expected to boost the Indian market, with analysts predicting a positive undercurrent.
  • Emerging market equities are expected to rally over the next 12 months, driven by earnings upgrades and anticipated interest rate cuts.
  • The MSCI EM index has risen for nine straight months, buoyed by AI optimism and strong buying from foreign investors.
  • The BSE and NSE will conduct a special Muhurat trading session tomorrow (beginning of Samvat 2082) for one hour between 1:45 pm and 2:45 pm.
  • The second quarter results from Hindustan Unilever, Colgate, SBI Life Insurance, and Dr Reddy's Lab, are expected this week.
  • Investors' response to the working results of Reliance, IndusInd Bank, HDBC Bank, etc. will also remain in focus this week.
  • The first phase of India-US trade deal is expected to be signed by November.

Statistics:

  • 185 out of 191 countries have avoided tit-for-tat tariff actions.
  • 9 months of consecutive growth for MSCI EM index.
  • 14% growth forecast for company earnings in 2026.
  • 1,480 expected value for MSCI EM index over the next 12 months.
  • 70% of world trade is still being conducted on most-favored-nation terms.
  • 2.45 pm to 1.45 pm: special Muhurat trading session timing.

Sources:

  • "Indian markets had been caught in a thunderstorm of tariffs since April this year." - The Free Press Journal Money on Sunday
  • "Analysts from London said, the Fed is in blackout as the ongoing US government lockdown makes data updates uncertain." - The Free Press Journal Money on Sunday
  • "We think the EM equity rally can extend, as macro trends and capital inflows remain supportive." - Kamakshya Trivedi, chief foreign exchange and emerging markets strategist in Goldman Sachs Research
  • "Goldman Sachs raised its forecast for the MSCI EM index of large- and mediumsize companies across emerging markets." - Goldman Sachs Research
  • "The BSE and NSE will conduct a special Muhurat trading session tomorrow (beginning of Samvat 2082) for one hour between 1:45 pm and 2:45 pm." - Indian National Press (Bombay) Pvt. Ltd.

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