Markets Slip on Tariff Concerns as Q1 Earnings Hold the Key to Rebound

Equity markets closed the week lower by more than 1%, dragged down by ongoing worldwide trade anxiety and a lackluster beginning to the Q1 earnings period, analysts said on Saturday.

While maintaining a relatively consistent performance for most of the week, profit-taking during the latter half of the week caused benchmark indices to fall. At the end of the week, the Sensex and Nifty also closed at their lowest levels at 82,500.47 and 25,149.85, respectively.

Ajit Mishra, Senior Vice President – Research at Religare Broking Ltd., said that investor mood was dented as global trade tensions re-emerged following U.S. President Donald Trump serving new tariff threats against Canada and other top partners.

While expectations of an interim trade agreement between the US and India did exist, the uncertainty kept risk appetite in check. And to boot, a soft kick-off to the Q1 earnings season — particularly following below-par numbers in IT major TCS — put more pressure on the markets in the last session," Mishra said.

Some relief came from selective consumption in consumption-led categories like FMCG and discretionary stocks on the back of evidence of a pick-up in urban demand and improving operating profit margins.

Overall, the economic environment provided some comfort, with inflation softening, interest rates moving downwards, and monsoon rains continuing to be favourable — all providing a moderately upbeat undercurrent.

Vinod Nair, Geojit Financial Services' Head of Research, said that the larger market indices also declined into the negative. "Broader indices fell into negative territory owing to a paucity of triggers to support prevailing premium valuations and disappointing numbers from a major IT bellwether, which had raised worries over FY26 earnings estimates," he added.

As the earnings season unfolds, investors will be looking closely at comments from companies regarding margins and industry outlooks.

Next week will be active on the earnings front, with the key names such as HCL Technologies, Tech Mahindra, Axis Bank, ICICI Bank, Wipro, JSW Steel, L&T Finance, and HDFC Bank likely to release their results.

On the macro front, focus will shift to the July Wholesale Price Index (WPI) and Consumer Price Index (CPI) inflation data, to be released on July 14. FII flows and movement in crude oil prices will also be closely watched by market participants for further cues.

The global markets are expected to be sensitive to news regarding international trade negotiations and upcoming economic data releases such as the U.S. inflation report.

We expect a consolidation phase in the Nifty index with a negative inclination in the short term, after the recent decline. Volatility is expected to remain going on in the backdrop of global uncertainties and the ongoing earnings season. Stock-specific strategy should be followed by traders with a focus on stocks with good earnings and relative strength," Mishra noted.