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Volatility to here to stay amid Tariff fatigue

ICICIdirect Research 13 Mar 2025 DISCLAIMER

Indian equity benchmarks relatively outperformed the global peers and settled the volatile week at 22400, down 0.5%. Nifty however has spent the week largely in the range of 22400-22600 but significant sectoral churning was the limelight of the week.  Significant sell-off seen among Technology names (Nifty IT declining by 4.5%) was compensated by Reliance. However, broader markets have remained under pressure and both mid and small cap indices have declined by nearly 3% each.  

What to expect: The lack of follow through strength above last week's high signifies prolonged consolidation in the broader range of 23000-21800 range. In the process, volatility would prevail tracking tariff related development and US Fed meet outcome wherein key support is placed at 21800 levels. However, some respite might be seen in the short term as FTSE rebalancing next week may provide some respite from the ongoing sell-off in the markets.

Beginning of relative outperformance: The ratio chart of Nifty / Dow Jones has recorded breakout from 6 months falling channel, indicating domestic market could relatively outperform the US equities going forward   

Global Macros: The cool off in US Dollar index and 10-year bond yield and decline in brent crude oil prices bodes well for emerging markets   

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