Opening Bell - 28 / 03 / 25

Opening Bell - Morning Commentary*
*Wall Street ends lower as investors digest Trump's auto tariffs; Indian smaller stocks to remain in demand today.*
Stock indexes fell for a second day as markets digested the latest round of tariff announcements. President Trump announced yesterday that he would slap *25% tariffs on automotive imports* to the U.S. General Motors, Stellantis and other automakers fell sharply. Stocks of international rivals such as BMW, Toyota and Hyundai that export to the U.S. also came under pressure.
The S&P 500 dropped 0.3%, while the Nasdaq shed 0.5% and the Dow Jones Industrial Average was 0.4% lower. *Defensive segments outperformed* with consumer staples and health care among the top performing sectors of the S&P 500.
The S&P 500 and Nasdaq are both on course to conclude the first quarter of 2025 in negative territory. So far in 2025, the *S&P 500 has lost about 3% and the Nasdaq is down almost 8%.*
Auto tariff announcement comes ahead of the highly anticipated reciprocal tariff announcement on April 2nd. Recent commentary has suggested the U.S. administration *could take a more lenient approach when applying reciprocal tariffs*, perhaps allowing for negotiations, although, the final outcomes remain uncertain.
*US GDP* growth rate has slowed in the last qurter of 2024, according to the latest economic data. The actual GDP growth rate came in at 2.4%. This figure is slightly higher than the forecasted growth rate of 2.3%, but it is s*ignificantly lower than the previous growth rate of 3.1%*.
Gold prices rose to a fresh all-time high on Thursday, bolstered by safe-haven inflows following U.S. President Donald Trump's announcement of new auto tariffs. *Bullion prices touched a record high of $3058 per ounce to mark a gain of over 15% this year.*
*The Bank of Mexico* delivered a unanimous 50-basis-point *interest rate cut* to 9.00% on Thursday, highlighting progress on inflation but warning of heightened uncertainty relating to trade tensions and a weakening economy.
NSE's plan to shift its derivatives expiry day to Monday from Thursday has been put on hold as SEBI has advised exchanges not to tweak the schedule until a new policy kicks in.
SEBI floated a consultation paper proposing that the expiry day could be on Tuesday or Thursday. NSE had earlier proposed to shift its expiry to Monday from Thursday, with the change kicking in from April 4.
Nifty resumed its upward journey gained 105 points to close at 23591 yesterday on the day of monthly derivative expiry, as anticipated, Nifty found support near 23400 and made a strong recovery of over 200 points from the day's low of 23412.
We are initiating the April series with an unprecedented open interest of 1,145 crore shares in the stock futures segment. Foreign Institutional Investors (FIIs) have begun covering their short positions from the March series. *60% of their total outstanding positions remain on the short side*, indicating potential for further short covering in the coming days—a development that bodes well for bulls. Furthermore, *80% of F&O stocks have exhibited long build-up* or short covering, suggesting a positive bias for the April series.
After experiencing two days of profit booking, the Nifty Midcap and Small Cap Indices have resumed their upward trajectory. While benchmark indices are expected to open with slight softness due to mild selling in larger stocks, we anticipate that *mid and small-cap stocks* will maintain a positive momentum, driven by robust demand from *local institutional investors.*