India Watches for Clarity on U.S. Tariffs, Mini Trade Deal While FIIs Deepen Bearish Bets
GIFT Nifty ticked up by 40 points early Thursday, hinting at a mildly positive start for Indian equities. But beneath that surface calm, investors are staring at a long list of variables — from U.S. tariffs to earnings, trade deals to currency flows — all shaping today’s mood.
With Q1 results kicking off and global cues pulling in multiple directions, Thursday’s session could be anything but boring.
A Quiet Finish Yesterday, But Tension Is Building
Markets closed a tad lower on Wednesday. Nothing dramatic. Just a slow, cautious drift into the red. Both the Nifty 50 and Sensex slipped slightly as traders chose to sit on their hands rather than bet big ahead of big events.
The U.S. tariff story? Still in motion. Trump’s latest letters to trading partners, including India’s neighbors, raised eyebrows. But with no official blow landed on New Delhi yet, local markets haven’t fully priced in the risk.
One-sentence paragraph here: Still, the air is thick with caution.
And it’s not just global pressure. The start of India Inc’s Q1 earnings season is always a period of nervous squinting at Excel sheets. Analysts are bracing for mixed signals — strong bottom lines in banking, maybe, but muted growth for IT and consumer goods.
GIFT Nifty Points to a Positive Open — But It’s Just a Hint
As of 7:00 AM IST, the GIFT Nifty futures were trading about 40 points higher. That’s not huge, but it’s enough to suggest a green start. The contract, traded on the NSE International Exchange in GIFT City, has become a go-to early indicator for domestic sentiment.
This slight uptick is being read as a sign that investors may be willing to nibble at risk — if there are no fresh shocks from the West.
Short sentence: That’s a big “if.”
Global markets provided a bit of cushion overnight. U.S. indices closed higher on Wednesday — Nasdaq gained over 1%, while the Dow rose nearly 200 points — partly thanks to strength in AI-linked stocks like Nvidia and Meta.
FIIs Build More Shorts in Futures — A Worrying Signal?
Foreign Institutional Investors (FIIs) continue to pull back. And not just in cash markets — their activity in index futures is turning more aggressive on the bearish side.
Their net short position swelled from ₹70,513 crore on Tuesday to ₹75,705 crore on Wednesday. That’s a big jump, and a signal that institutional sentiment remains hesitant.
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Net FII cash outflows have crossed ₹12,000 crore for July so far.
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Domestic institutions have been buying, but not enough to fully offset the pressure.
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The rupee has stayed relatively stable around 83.50 per dollar, but that may not last long if outflows persist.
One-line paragraph here: The mood is twitchy — not outright panic, but not confident either.
What Traders Are Watching This Morning
With GIFT Nifty holding its ground and U.S. equities supportive, traders are watching five key elements heading into Thursday’s session:
| Key Factor | Market Sensitivity | Notes |
|---|---|---|
| India–U.S. Mini Trade Deal | High | Talks reportedly nearing final stage |
| U.S. Tariff Developments | High | Still unclear if India will be hit next |
| Q1 Results Season | Medium-High | Focus on banks, IT, FMCG |
| FII Activity | High | Growing shorts seen as a red flag |
| Crude Oil Prices | Medium | Brent steady near $84 |
A resolution — or even a tweet — on the trade front could yank markets in either direction.
Also on the radar: any surprise guidance from early Q1 earnings today. A few key Nifty companies are due to report this week, and investors are already positioning for disappointment in tech.
Broader Technical Setup — Rangebound But Fragile
On the technical side, Nifty remains stuck between 23,450 and 23,900 — a zone it’s been grinding through for the past several sessions. Traders say that a clean break above 23,900 could invite fresh longs, but until then, the index is just bouncing within a tight band.
Bank Nifty, meanwhile, looks more vulnerable.
Short sentence again: It’s struggling to hold 52,000.
Momentum indicators like RSI are not screaming “buy” just yet. In fact, some algo models are flagging mild overbought signals in large caps, especially in auto and pharma names.
Rupee Holds Ground — For Now
Even as FIIs offload stocks and load up on shorts, the rupee has shown surprising calm. It ended Wednesday nearly flat around 83.50 per dollar, protected by RBI’s intervention and lower crude oil volatility.
But currency traders aren’t relaxed. They’re watching bond yields and U.S. inflation data closely. Any hawkish tilt from the Fed — or signs of policy stress — could hit the rupee fast.
