US-India trade pact: Markets brace for July 9 tariff deadline; Q1 earnings, FII flows to drive sentiment
Equity investors are gearing up for a potentially volatile week as the 90-day suspension period of US President Donald Trump's reciprocal tariffs expires on July 9, raising uncertainty over India-US trade relations.
Market experts believe that the outcome of the trade negotiations will be a key trigger, especially for sectors like IT, pharma, and auto that are sensitive to global commerce.
Trump had imposed a 26 per cent additional import duty on Indian goods entering the US earlier this year, but enforcement was deferred for 90 days. As the deadline nears, traders are cautious, awaiting clarity on whether the levies will be fully implemented, renegotiated, or further delayed.
'This week holds significant importance not only for Indian markets but for global equities as well,' said Ajit Mishra, SVP – Research, Religare Broking Ltd, according to news agency PTI.
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'The most anticipated event is the outcome of the US trade (tariff) deadline on July 9, which could shape global trade dynamics. Investors will also closely monitor the release of the US FOMC minutes on the same day', Mishra added.
Meanwhile, focus will also turn to corporate earnings, with Tata Consultancy Services (TCS) and Avenue Supermarts scheduled to kick off the Q1FY26 reporting season. Their results are expected to set the tone for broader market sentiment.
Vinod Nair, head of research at Geojit Financial Services, was quoted by PTI as saying that any favourable development on the India-US trade front could provide a fresh boost to investor confidence.
'Considering the broader indices are currently trading at elevated levels, market participants will closely watch for signs of earnings catch-up from upcoming Q1 results,' he said.
Siddhartha Khemka of Motilal Oswal Financial Services added, 'Overall, we expect the market to remain in consolidation mode, awaiting clarity on the India-US trade deal, while stock-specific action would continue on the back of Q1FY26 business updates.'
The past week saw the BSE Sensex fall by 626.01 points or 0.74 per cent, and the NSE Nifty declined by 176.8 points or 0.68 per cent.
Foreign Institutional Investor (FII) flows are also expected to remain volatile. 'Resumption of FII buying will hinge on two things,' said V K Vijayakumar, chief investment strategist, Geojit Investments. 'One, if a trade deal happens between India and the US, that will be positive for markets and FII flows. Two, Q1 FY26 result indications. If the results indicate earnings recovery, that will be positive. Disappointment on these factors can impact the market', Vijayakumar added.
Apart from these, investors are likely to track Brent crude price movements and rupee-dollar fluctuations, which could further impact trading dynamics through the week.
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