The stock market is set to navigate a turbulent week, with analysts predicting that the renewed tariff tensions between the US and China, coupled with domestic inflation data, will steer the markets. But here's where it gets controversial: the impact of these factors could be far-reaching, influencing not just the US and China but also global markets and emerging economies.
A Global Trade War?
The escalation of the US-China tariff war, which sparked a sell-off on Wall Street last Friday, is expected to dampen global risk sentiment. This resurgence in trade tensions could lead to dollar outflows, putting further pressure on emerging market equities and currencies. Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, warns that this could be a significant headwind for global markets.
US markets ended the week on a sour note, with the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average all sharply lower. This decline sets the tone for a week of heightened uncertainty.
Domestic Data and Earnings in Focus
Ajit Mishra, SVP of Research at Religare Broking Ltd, highlights that this week will be eventful, with a focus on key domestic macroeconomic data and a busy Q2 FY26 earnings calendar. The government will release retail inflation (CPI) figures for September on October 13, followed by wholesale inflation (WPI) on October 14. These data points will provide critical insights into the health of the domestic economy.
Investors will also be watching earnings from IT majors like Infosys, HCL Technologies, and Wipro, as well as banking heavyweight Axis Bank and Reliance Industries. These companies' performances can significantly influence market sentiment.
Global Cues and Monetary Policy
Jerome Powell, the Federal Reserve Chair, is expected to guide global markets with his upcoming speech. Mishra adds that Powell's comments on monetary policy direction will be closely monitored, especially given the current inflationary pressures.
Additionally, investors will track foreign investors' trading activity this week, as their moves can significantly impact market trends.
A Cautious Week Ahead
Santosh Meena, Head of Research at Swastika Investmart Ltd, believes this week is crucial due to the cautious global sentiment following the sharp decline in US markets amid renewed US-China tensions. The focus will shift to the United States, where Powell's speech on October 14 will be a key event. His comments on the Fed's interest rate outlook and inflation trajectory will be closely watched.
Last week, the BSE benchmark and NSE Nifty both climbed, but the gains may be short-lived if the market sentiment turns bearish.
So, will the markets continue their upward trajectory, or will the renewed tariff tensions and inflation data lead to a correction? What do you think? Feel free to share your thoughts and predictions in the comments below!
