Opening Bell - 09 / 04 / 25

Opening Bell - Morning Commentary

Action packed day ahead: Trump Tariff saga, US FOMC Minutes, RBI rate cut and possible change in stance, Weekly derivative expiry

U.S. equity markets closed lower on Tuesday, reversing gains at the open, as investors continue to digest the latest tariff headlines.

The S&P had risen more than 4% earlier on Tuesday on open as investors hoped that Trump would soften his stance or postpone a Wednesday deadline for tariffs. The S&P 500 sold off sharply on to close below 5000 for the first time in almost a year after it reversed a strong morning rally, while investor hopes faded for any imminent U.S. delays or concessions on tariffs ahead of a midnight deadline.

The U.S. will impose an additional 50% tariff on imports from China in response to the 34% retaliatory tariffs China announced last week. The additional 50% duty on imports from China will bring the U.S. tariff rate on Chinese imports to 104%. Trump's sweeping tariffs have raised fears of recession and upended a global trading order that has been in place for decades.

The S&P 500 has lost $5.83 trillion in market value, for its steepest four days of losses since the index was created in the 1950s.

Trump declared that he would soon announce "major" tariffs on pharmaceutical imports, arguing the duties would push drug companies to move manufacturing operations to the U.S.

Oil prices settled down more than $1 a barrel on Tuesday at a four-year low as investors priced in an increasing likelihood of a recession due to the escalating trade war between the U.S. and China, the world's two biggest economies.

US FOMC minutes for the Fed’s March meeting will be released today and could offer cues on whether Fed members view tariff led inflation to be transitory. US CPI for March will be released on Friday this week and a high reading could reduce expectations of a May or June rate cut by the Fed.

Asian shares tumbled on Wednesday as the White House's decision to proceed with substantial tariffs on trade partners, especially a 104% levy on China, soured investor risk appetite. Japan's Nikkei 225 fell 3.12% to 31,982.

In the first monetary policy review for the financial year 2025-26, Market expectations suggest that the RBI is likely to reduce key interest rates by 25 basis points. Easing inflation provides the RBI with scope for a more accommodative policy approach. Concerns regarding global economic headwinds, especially following the US's announcement of reciprocal tariffs, also play a role in these expectations.

The outcome of the MPC meeting will be made public by RBI Governor Sanjay Malhotra today at 10:00 A.M.

We expect the RBI to cut the repo rate by 25 bps and shift its stance to accommodative from neutral. The RBI is seen striking a dovish tone and we expect the bond yield curve to shift lower, with the 10-year yield expected to move towards 6.40% levels.

It was a rollercoaster ride for the Nifty yesterday, showcasing significant intraday volatility, ultimately closing at 22535, a gain of 374 points or 1.69%. We expect the markets to remain volatile today as well, as traders navigate the weekly derivative expiry today. FPI traders purchased index options yesterday ahead of the weekly expiry, indicating their willingness to pay option premium prices while anticipating increased market volatility today.

Nifty has recovered more than 950 points from recent lows, though still positioned below its 5-day average. Support for the Nifty has moved up to 22341, while resistance is placed in the range of 22800-22900.

Indian markets are poised to open lower on back of soft global cues.