GIFT Nifty indicates a weak open for markets, Fed Chair flags increasing uncertainty

Optimism from India’s FTA with the UK as US trade talks with China are providing some support.

Benchmark indices Nifty 50 and Sensex may see a muted open in trade on Thursday, May 8, amid uncertainty around global trade and geopolitical tensions. While the markets seem to be looking past Operation Sindoor, and not pricing in a full-blown war. Further, positive trade discussions between US and China might lift global sentiment as well.

After India launched a pre-emptive strike across the border in Pakistan, sentiment turned cautious in the April 7 session, though experts said that the move was largely priced in.

Market participants had likely priced in some retaliation, taking cues from the Pahalgam attack. Instead, the markets found optimism in India’s free trade agreement with the UK. Stocks in sectors such as textiles, chemicals, and autos rallied in response.

"Indian equity markets exhibited strong resilience amid recent Indo-Pak border tensions, the measured market response indicated that geopolitical risks were largely priced in and expectations of de-escalation is prevailing among investors. At the same time, the progress on the India–UK FTA further buoyed investor optimism," said Vinod Nair, Head of Research, Geojit Investments.

According to experts, given the tariff-related uncertainties,  expectations are even higher for the India–US trade pact. “That could be a far more consequential tailwind. With US tariffs on China rising, India is well placed to benefit and align more closely with global supply chains,” said a fund manager noted.

At 1.50 am, the GIFT Nifty index was down 100 points, falling 0.4 percent.

Wall Street ended April 7 session with gains, after a volatile session, marked by sharp swings from gains to losses. The S&P 500 rose 0.43 percent, while the Dow Jones index gained 0.7 percent and the Nasdaq Composite settled 0.27 percent higher, after seeing intense selling pressure during the session.

The US Federal Reserve left its benchmark lending rate unchanged, in the range of 4.25 to 4.5 percent. According to U.S. Federal Reserve Chair, inflation in the U.S. may see an uptick, growth momentum could slow while unemployment rises, if U.S. President Donald Trump's broad-based tariffs are implemented.

Further, President Trump announced that he would not preemptively reduce tariffs on China to kickstart trade negotiations with Beijing. U.S. Treasury Secretary Scott Bessent along with officials would meet Chinese officials in Switzerland this week, signaling possible progress on trade talks after last month’s tariff turmoil. “We’ve got to deescalate before we move forward,” Treasury Secretary Scott Bessent said in an interview.

President Donald Trump said he’s unwilling to preemptively lower tariffs on China in order to unlock more substantive negotiations with Beijing on trade.

This would mark the first major trade discussion between the two trading partners, after U.S. President Donald Trump raised the tariff on imports from China to 145 percent in April.

In the previous session, the Sensex settled the day at 80,746.78, up 105.71 points or 0.13 percent at 80,746.78 while the Nifty closed with a gain of 34.80 points or 0.14 percent at 24,414.40. About 2121 shares advanced, 1620 shares declined, and 149 shares remained unchanged on BSE.

"On the index front, Nifty is attempting to hold the 24,100 level; a breach could lead to further downside towards 23,800. Until then, the index is expected to trade within the 24,100–24,600 range. In the current scenario, traders are advised to adopt a cautious approach and avoid aggressive positions until the market stabilizes."

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