India stocks outlook: After Trump tariffs, focus shifts to RBI monetary policy, Q4 earnings

Trump's reciprocal tariff announcement last week sent tremors across asset classes globally, including here in India. Equity markets worldwide slumped, particularly after Trump's sweeping trade tariffs, which stoked fears of an all-out trade war and a global economic recession.

"For India, the impact may not be as deep as anticipated given the size of trade balance with US," said Union Bank of India in a note.

Indian stock indices closed the week on a sour note, weighed down by the Trump reciprocal tariffs and the uncertainties surrounding them. The Sensex slumped about 2,100 points this week.

"Investors are expected to closely monitor any countermeasures implemented by global trade partners, which could further exacerbate geopolitical and economic uncertainty. This cautious sentiment is reflected in the sustained rally in gold and bond prices, underscoring a pronounced shift toward safe-haven assets," said Vinod Nair, Head of Research, Geojit Investments Limited.

"The tariffs imposed on India are relatively lower compared to those on other Asian economies, offering a degree of relief. Any constructive developments arising from the ongoing India-US bilateral trade negotiations could serve as a supportive catalyst for the market," Nair added.

Since assuming office for his second term, President Trump has reiterated his stance on tariff reciprocity, emphasising that the United States will match tariffs imposed by other countries, including India, to ensure fair trade.

On April 2, the US President issued an executive order on reciprocal tariffs, imposing additional ad valorem duties ranging from 10 per cent to 50 per cent on imports from all trading partners. The baseline duty of 10 per cent will be effective from April 05, 2025, and the remaining country-specific additional ad valorem duty will be effective from April 09, 2025. The additional duty on India is 26 per cent.

Going ahead, the market focus will gradually shift toward the upcoming corporate earnings season.

"We expect the market to remain volatile with sector-specific action, tracking RBI's interest rate decision, pre-quarterly business updates/Q4 results and global market cues," said Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services.