Tariffs, Trends & Turning Points: What Investors Should Know Now

Just when it felt like the Indian stock market was finally getting into a rhythm this year, global drama came knocking—again.

A few weeks ago, the U.S. decided to slap new tariffs on a bunch of imports, including some of India’s key exports like steel and electronics components. The reason? The usual suspects—“national interest” and “trade imbalances.” We’ve heard that one before.

And just like that, the markets reacted.

Where the Indices Stand

Starting with the benchmark, the Nifty 50 is currently neutral on the weekly chart. It recently bounced off its 100-week moving average at 22,194, which has become a key support level. The index faces immediate resistance at 22,800, and if that level gives way, it opens the door to a possible rally toward 24,200. For now, it’s a “wait and watch” setup—neither overly bullish nor clearly bearish.

Meanwhile, Bank Nifty is looking much more promising. It recently staged a weekly breakout around 52,480 and is now on many traders’ radars for a potential uptrend. With resistance looming at 53,904 and support at 51,700, this index is showing signs of leading the charge, especially as banking stocks continue to benefit from strong credit growth and a relatively resilient domestic economy.

The Nifty 500, which offers a broader look at market sentiment, is also sitting in neutral territory. It’s currently facing resistance at 21,690, and a sustained move above this could push it toward 22,819 or even 23,550. On the downside, 20,816 is providing a solid floor. It’s not an aggressive market, but the structure suggests potential, especially if large-cap momentum spills over to the broader universe.

On the other hand, Nifty Smallcap 250 remains in a more cautious zone. The index is currently oversold, which might actually work in its favor—if it can move above the 100-week moving average at 14,910. That move could set the stage for a recovery toward 15,494 and beyond. For now, 14,080 remains a key support to keep an eye on.

The Nifty Midcap 150 mirrors this indecisive sentiment. It's hovering near resistance at 19,568, and a breakout could take it toward 20,406 and 21,481. If things turn bearish, watch out for support around 18,675. In short, the midcap and smallcap space isn’t exactly thrilling right now, but there could be value lurking for patient investors.

And finally, there's Nifty IT—which isn’t painting a pretty picture. The sector is currently in a bearish phase, with key support at 30,648. Last week’s price action showed a bit of a reversal, but unless it breaks above the 200-week moving average at 33,865 (and sustains there), any talk of a trend change might be premature. Realistically, that kind of shift could take 10 to 15 weeks—so patience is essential here.

60% of revenue for top Indian IT firms comes from the U.S. market. If U.S.-India trade tensions remain limited to tariffs on goods, Indian IT might actually benefit from cost-driven outsourcing. But if the U.S. turns the spotlight on service outsourcing or visa restrictions, expect more pain—especially for mid-tier firms.

Impact of Tariffs by Sector

·        Pharmaceuticals: Facing a proposed 25% tariff, could severely hit companies like Sun Pharma, Dr. Reddy's, and Gland Pharma, with 31% of India’s pharma exports going to the US.

·        Chemicals: US tariffs could cause up to $7 billion in losses, affecting firms like Tata Chemicals.

·        Gems & Jewelry: With $9.9B in exports to the US, this sector faces increased costs due to rising gold leasing interest rates.

·        Textiles & Clothing: Already facing 15–35% US tariffs, Indian firms could be squeezed further. However, they may gain if Chinese goods face even higher tariffs.

·        Electronics: A bright spot—exports surged 253% in 2023. Tariffs on China may benefit India here.

·        Aluminum & Food Products: Also at risk, though India’s competitive edge may offer partial protection

How to Act in This Market

Here’s the part that matters most: What should you actually do?

Lighten Up On:

• Export-heavy sectors like IT, pharma, and chemicals
• Companies with narrow revenue streams and low domestic demand

Focus On:

• Banking – Credit growth is real, and balance sheets are healthy
• Telecom – Still riding the data and 5G wave
• Utilities & Infra – Government capex plays hold strong potential
• Consumer Goods – Domestic demand hasn’t slowed much
• Real Estate – A recovery story that’s quietly unfolding

And if you're a smallcap/midcap fan? Be selective. There’s potential—but patience will be your best friend.

Final Thoughts: Stay Nimble, Stay Informed

This market isn’t falling apart, but it’s not running away either. It's a market that rewards awareness and punishes assumptions. So:

• Reassess your allocations
• Be ready to pivot
• Follow key news from the U.S. and India
• Don’t chase… wait for confirmation

 

📌 Disclaimer

This blog is for educational purposes only and should not be taken as investment advice or a buy/sell recommendation. Always consult with a certified financial advisor before making any investment decisions.