Market Outlook: Reciprocal Tariffs, Global Trends, and FII Trading

Equity investors’ sentiment in the upcoming week is likely to be influenced by various factors such as the implementation of reciprocal tariffs on April 2, trends in overseas markets, and the activity of foreign investors. With stock markets closed on Monday for Eid-Ul-Fitr, all eyes are on the US threatening to impose reciprocal tariffs on key trading partners, including India, which could have significant implications on global trade.

Prashanth Tapse from Mehta Equities Ltd emphasized the importance of Trump’s tariff announcement on April 2, suggesting that it will be a key factor to watch for investors. In addition to tariff developments, macroeconomic data such as PMI data for the manufacturing and services sectors will be closely monitored by market participants.

Ajit Mishra from Religare Broking Ltd highlighted that during the holiday-shortened week, investors will focus on global developments in the absence of major domestic triggers. The trend in FII flows will also be influenced by the impact of reciprocal tariffs, with V K Vijayakumar from Geojit Investments Limited suggesting that less severe tariffs could sustain the market rally.

The shift in FII strategy from sustained selling to modest buying observed in recent weeks continued with increased intensity, indicating a changing sentiment among foreign investors. Investors will also keep an eye on the rupee-dollar trend and movement of global oil benchmark Brent crude, which can impact market dynamics.

Vinod Nair, Head of Research at Geojit Investments Ltd, anticipated that this week will provide greater clarity on tariff developments and their impact on the global economy. Key economic indicators to watch include US job opening data and India’s PMI, offering insights into economic momentum in their respective regions. Quarterly earnings reports will also draw investor focus, providing a clearer picture of the earnings recovery scenario.

Last week saw positive movements in the BSE benchmark gauge and NSE Nifty, with the market capitalization of BSE-listed firms witnessing a significant surge in the 2024-25 fiscal year. The overall market outlook remains influenced by global developments, reciprocal tariffs, FII flows, and key economic indicators, which will shape investors’ sentiment in the impending week.