Markets Defy Gloomy Forecasts: Trade Deal Jitters Can’t Stop the Rally

Global markets shrug off uncertainty like a bad hangover—green across the board despite mixed signals.

The elephant in the trading floor: Nobody actually knows what's in the trade deal (or if it even exists).

Active verbs only? Try these: Markets climb, analysts waffle, hedge funds hedge. Rinse and repeat until the next Fed meeting.

Cynical finance jab: If 'trade deal uncertainty' had a dollar for every time it moved markets, we'd all be shorting volatility.

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The market has already corrected significantly due to trade concerns, with the Nifty falling over 1,000 points across five consecutive weeks largely due to the US imposing a 25 per cent tariff on Indian goods, bringing the index to around 24,600 levels.

Foreign institutional investors continued their selling pressure, extending their outflow streak for the tenth consecutive session on August 1, offloading equities worth ₹3,366 crore. In contrast, domestic institutional investors provided support, continuing their buying streak for the 20th straight day with investments of ₹3,186 crore on the same day.

VLA Ambala, Co-Founder of Stock Market Today, noted the broader challenges facing the market. “The market is under pressure due to several macroeconomic challenges, including the depreciation of the INR against major global currencies, rising crude oil prices adding to import costs, trade tariffs, and a decline in capital expenditure, all signaling a broader slowdown,” Ambala said.

The cumulative impact of foreign selling has been substantial, with FIIs selling ₹47,666.68 crore in July alone, and between January and July 2025, the total outflow reached ₹1,70,017.99 crore. “This shows waning interest in our equity market and reallocating capital to other emerging markets with better opportunities,” Ambala added.

Among individual stocks, Hero MotoCorp led the gainers on the Nifty 50, surging 2.49 per cent to ₹4,419, followed by Tata Steel which gained 2.29 per cent to ₹156.52. Bharat Electronics Limited advanced 1.62 per cent to ₹383.30, while IndusInd Bank ROSE 1.57 per cent to ₹796 and Grasim Industries climbed 1.46 per cent to ₹2,762.

On the losing side, Power Grid Corporation declined 1.36 per cent to ₹287.30, while Tech Mahindra fell 0.85 per cent to ₹1,426.50. NTPC dropped 0.79 per cent to ₹328.30, SUN Pharmaceutical Industries slipped 0.64 per cent to ₹1,619.30, and Infosys declined 0.63 per cent to ₹1,460.40.

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The global backdrop provided some support as weaker-than-expected US jobs data raised hopes for a Federal Reserve rate cut in September. “Adding fuel to the bearish fire was a much weaker than expected US July jobs data, which raises hopes of a rate cut in the September US Fed meeting,” Tapse observed.

The disappointing US employment report also boosted Gold prices as investors sought safe-haven assets. Aksha Kamboj, Vice President at India Bullion and Jewellers Association, explained the precious metal’s appeal. “Gold prices climbed following weaker-than-expected U.S. jobs data and downward revisions to figures from the previous two months, which triggered a sell-off on Wall Street and renewed demand for safe-haven assets,” Kamboj said.

Despite the positive opening, technical analysts remain cautious about the market’s near-term direction. Ambala noted that “traders should continue with a sell-on-rise strategy until the index reaches the key support zone at 24,000 to 24,150.”

Sector-wise, paint and FMCG stocks are expected to outperform. Motilal Oswal highlighted positive expectations for paint stocks, noting they “are expected to benefit from improving demand ahead of the festive season.” The brokerage expects Asian Paints and Berger Paints to perform well.

Similarly, FMCG stocks are anticipated to gain momentum following strong quarterly results from Hindustan Unilever Limited, Dabur India, and Emami. “Expect positive for FMCG stocks after good quarterly results announced by HUL, Dabur India and Emami,” according to Motilal Oswal’s outlook.

Market participants are advised to maintain caution given the uncertain environment. “Given the prevailing environment of uncertainty and elevated volatility, traders are advised to maintain a cautious ‘wait and watch’ stance, particularly when dealing with Leveraged positions,” Matalia recommended.

Published on August 4, 2025