The tariff issue stems from President Donald Trump’s decision earlier this year to impose an additional 26 per cent duty on Indian goods.
Indian equity markets are expected to witness heightened volatility this week as investors eye the July 9 deadline for the expiry of the US’s 90-day tariff suspension on Indian imports. Alongside, the market will closely track Q1FY26 earnings, foreign institutional investor (FII) flows, and cues from the US Federal Reserve.
The tariff issue stems from President Donald Trump’s decision earlier this year to impose an additional 26 per cent duty on Indian goods. Though enforcement was deferred by 90 days to facilitate trade talks, the deadline now looms large, with no formal resolution announced so far.
“This week holds significant importance not only for Indian markets but for global equities as well,” said Ajit Mishra, SVP – Research at Religare Broking, to PTI.
Key Triggers: Tariffs, Trade, and Earnings
Market experts believe the outcome of the India-US trade negotiations will be a pivotal trigger for sectors most exposed to global markets, including IT, pharmaceuticals, and automobile components. “The most anticipated event is the outcome of the US trade (tariff) deadline on July 9, which could shape global trade dynamics,” Mishra added.
The release of the US Federal Open Market Committee (FOMC) minutes, also due on July 9, will add another layer of complexity, potentially influencing global risk sentiment and dollar movement.
Earnings Season Begins with TCS, Avenue Supermarts
On the domestic front, earnings season kicks off with Tata Consultancy Services (TCS) and Avenue Supermarts reporting their Q1FY26 results. These initial updates are expected to set the tone for broader expectations across sectors. “Considering the broader indices are currently trading at elevated levels, market participants will closely watch for signs of earnings catch-up from upcoming Q1 results,” said Vinod Nair, Head of Research at Geojit Financial Services.
“We expect the market to remain in consolidation mode, awaiting clarity on the India-US trade deal, while stock-specific action would continue,” added Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services.
Foreign Flows to Stay Volatile
FIIs, which have shown mixed interest in recent weeks, are likely to remain cautious until there’s greater clarity on both policy direction and corporate performance. “Resumption of FII buying will hinge on two things,” said V K Vijayakumar, Chief Investment Strategist at Geojit.
“First, if a trade deal happens between India and the US, that will be positive for markets and FII flows. Second, if Q1 FY26 results indicate earnings recovery, that will also be a strong trigger. Disappointment on either front could hurt sentiment,” he warned.
Market Recap and Technical Outlook
In the past week, the BSE Sensex dropped 626.01 points (0.74 per cent), while the Nifty 50 fell 176.8 points (0.68 per cent), as investors adopted a wait-and-watch stance amid macroeconomic concerns and muted global cues.
The week ahead could continue in consolidation territory, with stock-specific action likely to dominate.
Additional Watch Points
Apart from policy and earnings, market participants will also monitor:
- Brent crude price trends, which influence inflation and fiscal expectations.
With a critical tariff decision deadline, the beginning of the earnings season, and uncertain FII flows, this week could prove pivotal for Indian equities. Investors are advised to remain cautious, focusing on fundamental earnings performance and awaiting clarity from New Delhi and Washington.
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