Stock Market Volatility and Economic Indicators
In recent weeks, global stock markets, including India, have experienced significant volatility. Key events and economic indicators have influenced these market fluctuations.
Market Reactions to Tariff Announcements
- On April 2, the Dow Jones Industrial Average fell sharply by 1,450 points or 3.4% due to US President Donald Trump's announcement of reciprocal tariffs.
- Global markets, including India's BSE Sensex, were affected, with the Sensex dropping from 76,617 to 73,137 by April 7.
- Brent crude oil prices also fell from $74.95 per barrel to $64.4 during the same period.
Market Recovery and Influencing Factors
- Subsequently, global markets partially recovered. The BSE Sensex regained and surpassed the 80,000 mark, closing at 80,218 on Monday, a 2.2% increase year-to-date.
- The recovery is attributed to Trump's pause on higher tariffs, allowing for potential negotiations with other countries.
- There is optimism around an India-US trade deal, potentially making India the first to sign such an agreement.
Economic Indicators and Foreign Investments
- The dollar index has weakened, dropping from 111 in January to around 99, which affects currency strength.
- The RBI's monetary policy committee reduced the benchmark repo rate by 25 basis points to 6%, indicating possible future rate cuts to stimulate the economy.
- Foreign investors have shown increased optimism, investing significantly in the markets recently.
Global Economic Outlook
- The IMF has revised the global growth forecast to 2.8%, a decrease of 50 basis points from earlier estimates.
- India's growth estimate has also been downgraded, with some analysts predicting an even sharper slowdown.
Performance of Indian Corporates
- Indian companies are reporting subdued revenue and profit growth, with notable sectors like consumption, investments, and exports showing weaknesses.
- For example, HUL reported volume and sales growth at 2% and 3%, respectively, while Dalmia Bharat saw a 3% decline in volumes.
- Infosys reported a sequential decline in revenues and expects revenue growth of 0-3% for 2025-26.
The ongoing impact of US tariffs and related uncertainties are expected to further influence market dynamics in the coming months.
