Benchmarks likely to make positive start after US tariff pause

Indian equity markets are likely to make a positive start on Friday, rebounding from the previous session's sharp decline, after President Donald Trump announced a 90-day pause on new reciprocal tariffs. Additionally, the upcoming Q4 earnings season is likely to contribute to positive sentiment, driven by expectations of strong corporate performance.

Some of the key factors to be watched:

US suspends additional 26% tariff on India: White House executive ordered that the US has temporarily suspended additional tariffs on India for 90 days, until July 9, 2025, offering relief to Indian exporters. This decision provides a window for advancing bilateral trade agreement talks between India and the US.

India's exports cross $820 billion in 2024-25: Commerce ministry said that the country's goods and services exports have crossed $820 billion in 2024-25, marking a nearly 6 per cent increase over the previous fiscal year despite global economic uncertainties. The exports stood at $778 billion in 2023-24.

India, Russia agree on six new strategic projects: India and Russia have agreed on six new strategic projects to boost bilateral investment during the 8th India-Russia Working Group session in New Delhi. 

Moody’s Analytics cuts India’s 2025 GDP growth forecast to 6%: Moody’s Analytics has cut India’s GDP growth forecast to 6.1 per cent for 2025 on looming higher US reciprocal tariff threats. It said the US is one of India’s largest trading partners, so a 26 per cent tariff hovering over imports of Indian goods will heavily impede the trade balance.

Aviation industry stocks will be in focus: ICRA said that Indian airport operators are expected to see an 18-20 per cent topline year-on-year growth in this fiscal, driven by a sustained improvement in passenger traffic and tariff hike as well as ramp-up in non-aeronautical revenues.

On the global front: The US markets ended in the red on Thursday, as ongoing concerns about rising trade tensions between the U.S. and China weighed on the markets, as Trump excluded the country from the pause and even raised the tariff on Chinese goods to 125 percent. Asian markets are trading mostly in red on Friday following the broadly negative cues from Wall Street overnight.

Back home, Indian equity benchmarks ended lower by over half percent on Wednesday due to losses in IT, Realty and Capital Goods stocks. Sentiment took a hit following the announcement of fresh U.S. tariffs on China, leading to a gap-down opening and a largely range-bound session thereafter. Finally, the BSE Sensex fell 379.93 points or 0.51% to 73,847.15, and the CNX Nifty was down by 136.70 points or 0.61% to 22,399.15.

Some of the important factors in trade:

RBI cuts interest rate by 25 bps to 6%: The RBI has slashed key interest rate by 25 basis points, for the second time in a row, to support a shuttering economy hit by reciprocal tariffs imposed by the US. Following the rate cut, the key policy rate eased to 6 per cent providing relief to home, auto and corporate loan borrowers.

RBI worried about tariff war impact on growth: Amid the ongoing global tariff war, Reserve Bank Governor Sanjay Malhotra said he is more worried about its impact on growth than inflation. He said RBI has reduced the growth forecast for 2025-26 by 20 basis points to 6.5 per cent.

Indian economy likely to grow 6.7% in FY25: The Asian Development Bank (ADB) has said that India’s gross domestic product (GDP) is expected to expand by 6.7% in fiscal year (FY) 2025, on account of higher domestic demand, rising rural incomes, a strong services sector, and moderating inflation that will boost consumer confidence.