A Market Morning Wrapped in Suspense
The financial world woke up to a headline that could swing global trade narratives—Donald Trump extended the tariff pause on China for another 90 days.
At first glance, this might have been expected to spark optimism across global markets. Yet, Wall Street barely flinched, with all major indices closing in the red.
The U.S. is now holding its breath for the June inflation report—CPI is expected to rise 0.2% month-on-month and 2.8% year-on-year. Brent crude remains under $67, with traders watching closely for the Trump–Putin Alaska talks on August 15.
Asian & Indian Markets: A Mixed Start
Asian markets opened with mixed sentiments—Japan’s Nikkei hit an all-time high after a trading holiday, while other indices moved cautiously.
In India, the Nifty started just 30 points lower, but yesterday’s sharp closing recovery proved that domestic bulls are far from giving up.
Mutual fund data is telling a different, more reassuring story—₹28,000 crore gross flows in July, with ₹14,000 crore net flows even after adjusting for new fund offers.
Legendary investor Rakesh Jhunjhunwala’s 2017 prediction seems to be unfolding—domestic investors are now the backbone of Indian markets.
The BofA Perspective: Nimble & Rotating
Bank of America’s latest advisory is not the usual “buy-and-hold” mantra. Instead, they recommend nimbleness and sector rotation to generate alpha in a market hit by tariffs and geopolitical tensions.
Their view:
- IT sector upgraded from underweight to overweight.
- Utilities shifted from underweight to neutral.
- Pockets of opportunity in building materials, auto components, travel & tourism.
This caution is matched with optimism from Goldman Sachs, which sees a mass consumption revival building through FY26–27, particularly in rural and lower-income segments.
Technical Setup: Key Levels to Watch
- Nifty50 Resistance: 24,650 (short-term), 24,800–24,850 (major breakout zone).
- Support: 24,330 (immediate), 24,200 (200-day EMA).
- Bank Nifty Resistance: 55,590–55,995.
- Support: 55,090–54,690 (100-day EMA near 55,000).
Derivatives data shows FII positioning remains heavily short, with the long-to-short ratio near 8:92—indicating persistent foreign selling pressure.
Earnings in Focus: Winners & Losers
- Hindalco (Cautious Outlook) – Novelis, which contributes 60% of Hindalco’s revenue, reported falling margins and profits, hurt by U.S. tariffs and operational disruptions. Some analysts cut the target price to ₹705, though others see Q1 as the possible bottom.
- Tilak Nagar Industries (Winner) – Revenue up 30.6%, EBITDA up 88%, strong expansion plans for its distillery.
- KN&R Construction (Loser) – Third straight revenue decline, rising finance costs, and weaker profitability.
- Office Space Solutions (Positive) – Consistent margin improvement and significant PAT growth.
- Glasscoat (Positive) – Revenue up 25%, margins improved, strong order book, though the recent stock rally may already factor in the good news.
The Suspense: Will the Bounce Hold?
The Nifty’s comeback after six straight weeks of decline is promising—but is this a sustainable turnaround or just a relief rally?
With FIIs still bearish, global tariff risks looming, and inflation data pending, markets could swing either way.
Domestic SIP flows, however, act as a safety net, preventing steep declines and slowly building a foundation for the next bull phase.
📌 Key Takeaways for Investors
- Stay nimble and be ready to rotate between sectors.
- Keep a close eye on IT, utilities, auto components, and travel.
- Use SIPs to accumulate quality stocks during dips.
- Watch for global trade updates, especially post-August 15 Alaska talks.
- Monitor inflation and interest rate signals closely.
❓ 5 Investor Q&A
Q1: Why didn’t the U.S. markets rally after the tariff pause?
A: Traders are now focused more on inflation, interest rates, and broader economic signals rather than short-term trade pauses.
Q2: Are Indian markets safer because of domestic SIP flows?
A: Yes, domestic investors provide stability, but global events can still cause volatility in the short term.
Q3: Should I buy Hindalco now?
A: Only if you believe management’s view that Q1 was the worst quarter and that tariff pressures will ease. Otherwise, wait for more clarity.
Q4: Which sectors could outperform in the coming months?
A: IT, utilities, building materials, auto components, and travel & tourism are on analysts’ radar.
Q5: Is this a good time to invest in small caps and midcaps?
A: Caution is advised—while there are opportunities, valuations in many small and midcap stocks are stretched.