US Tariffs and Global Trends Fuel Market Volatility, Say Analysts

Equity markets are expected to be influenced by the current developments in US tariffs, global market trends, and the trading activities of foreign investors according to analysts.

Investor sentiment remains weak due to concerns surrounding escalating trade tariffs and significant foreign fund outflows, which may contribute to volatile market trends moving forward, experts have observed.

The previous month saw considerable losses in the NSE Nifty, with a drop of 1,383.7 points or 5.88 percent. In parallel, the BSE Sensex experienced a decrease of 4,302.47 points or 5.55 percent throughout February.

Comparatively, from its peak of 85,978.25 last year on September 27, the BSE benchmark index has seen a significant decline of 12,780.15 points or 14.86 percent. The Nifty has also fallen by 4,152.65 points or 15.80 percent since its peak of 26,277.35 on September 27, 2024.

Vinod Nair, the Head of Research at Geojit Financial Services, anticipates a careful observation of key events such as the tariff policy and jobless claims by investors. It is expected that market conditions will persist weakly in the short term, with a gradual improvement forecasted as earnings recover from Q1 FY26 and global trade policy uncertainties ease off.

Similarly, Siddhartha Khemka, the Head of Research and Wealth Management at Motilal Oswal Financial Services Ltd, predicts that market conditions will continue to be shadowed by weak global sentiments and a lack of domestic triggers.

The Indian economy’s growth of 6.2 percent in the December quarter suggests a modest recovery from prolonged sluggishness, falling below the previous year’s expansion amidst looming concerns of a US tariff war.

Despite this, the 6.2 percent growth, although an increase from the revised figure of 5.6 percent in the July-September 2024 period, remains lower than the RBI’s 6.8 percent projection for that timeframe.

In the midst of uncertainty, particularly surrounding potential trade wars, Ajit Mishra, SVP of Research at Religare Broking Ltd, emphasizes the adverse impact of persistent Foreign Institutional Investors selling, further intensifying market pressures.

Gross GST collections experienced a 9.1 percent growth, reaching around Rs 1.84 lakh crore in February, driven by domestic consumption and hinting at a potential economic upturn.

The recent data release revealed significant figures across several categories, with Central GST at Rs 35,204 crore, State GST at Rs 43,704 crore, Integrated GST at Rs 90,870 crore, and compensation cess amounting to Rs 13,868 crore.

Market expert Satish Chandra Aluri from Lemonn Markets Desk suggests an approaching market capitulation, with a potential relief rally in the near future due to oversold conditions. Despite this, the market is generally expected to maintain a volatile trajectory with a downward bias.