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Trump reciprocal tariffs to keep volatility high

ICICIdirect Research 07 Apr 2025 DISCLAIMER

Indian equity benchmarks corrected 2.5% (at 22900) for the week, in tandem with global peers tracking reciprocal tariff announcement which severely impacted IT, pharma, Metal sector while financials remained an outlier

What to expect: In the upcoming truncated week we expect Nifty would form a higher base while sustaining above the key support threshold of 22200. In the process, stock specific action would continue amid elevated volatility onset of Q4 earning season, coupled with RBI Policy, Tariff development and US inflation print. Hence, buying on dips would be the prudent strategy to adopt wherein focus should be on domestic themes rather than global. On the upside, 23800 would continue to act as resistance. 

Structural improvement: The index is undergoing healthy retracement as over past eight sessions it has merely retraced 50% of earlier six sessions up move, highlighting inherent strength that bodes well for next leg of up move. While sailing through the global volatility, we are witnessing some silver linings which would provide impetus for pullback rally in coming weeks, details listed below:

Bank Nifty: Banking space has been showing resilience by sustaining above last week’s low. In the coming truncated week, holding above 50000 marks on a closing basis would keep pullback option open

Global Macros: Weakness in US 10-year bond yields, Dollar index and Brent crude oil prices bodes well for emerging markets

RBI Policy: Clarity on rate cut in upcoming RBI's policy would boost the market sentiment

Bullion: Further profit booking in precious metals would increase the possibility of change in asset allocation  

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