Indian Markets Rocked: 5 Shocking Reasons Volatility Will Surge Despite Tariff Truce

Indian equities face a volatile session as global markets reel from shifting U.S.-China trade dynamics. While Trump’s 90-day tariff truce sparked a brief rally—lifting Gift Nifty futures 2.5%—optimism remains fragile. TCS’s weaker-than-expected earnings, tied to client caution over tariffs, spotlight risks for India’s export-driven sectors.

Domestic indices may see early gains from oversold conditions after Wednesday’s slump (Sensex -0.51%, Nifty -0.61%), but broader sentiment stays shaky: India’s volatility index surged 55.8% this week, its sharpest rise since March 2020. Global cues add pressure—U.S. stocks fell 3%, Asian markets reversed gains (Nikkei -5%), and investors flocked to gold and the Swiss franc. While a weaker dollar could aid exporters, lingering trade war anxieties and erratic policy shifts suggest caution.

Friday’s trading hinges on whether bargain-hunting outweighs structural fears, with sector rotation toward defensives likely. Investors eye upcoming earnings and tariff developments for clarity in an increasingly risk-averse landscape.

Indian Markets Rocked: 5 Shocking Reasons Volatility Will Surge Despite Tariff Truce

As global investors grapple with the latest twist in the U.S.-China trade saga, Indian equities face a critical test of resilience. The Trump administration’s surprise 90-day tariff pause triggered a fleeting rally in U.S. markets, offering Asian counterparts temporary relief. However, the relief may prove fragile for India, where conflicting signals—from corporate earnings to currency fluctuations—paint a complex picture for Friday’s trading session.

The Tariff Rollercoaster: Short-Term Relief, Long-Term Jitters 

While Gift Nifty futures signaled a 2.5% rebound at open (pointing to Nifty 22,933.5), optimism remains tempered. The tariff pause, though initially sparking risk-on sentiment, has done little to resolve structural trade tensions. Analysts warn that abrupt policy shifts inject uncertainty, particularly for export-reliant sectors like IT. TCS’s underwhelming Q4 results—attributed to client hesitancy amid tariff disruptions—underscore how trade war tremors ripple through India’s tech crown jewel.  

“This isn’t a reset—it’s a timeout,” observes Pranay Aggarwal of Stoxkart. “Markets are pricing in volatility, not stability.” India’s volatility index (VIX) surged 55.8% this week to 21.43, its sharpest weekly climb since March 2020’s pandemic meltdown.  

Global Crosscurrents: Safe Havens vs. Risk Assets 

Overnight, U.S. markets closed lower with the S&P 500 shedding 3%, while investors flocked to gold (up 3% to record highs) and the Swiss franc (10-year peak against the dollar). This flight to safety highlights enduring anxiety, even as Treasury auctions stabilized bond markets post-selloff.  

In Asia, Friday brought sobering reversals:  

• Japan’s Nikkei plummeted nearly 5%, erasing Thursday’s gains.  

• Singapore’s STI slid 3%, mirroring pullbacks in Malaysia and the Philippines. 

These retreats suggest that tariff-related optimism is fleeting, with traders wary of escalating rhetoric once the 90-day window closes.  

Domestic Catalysts: IT Weakness vs. Broad Market Resilience 

While TCS’s earnings miss may drag tech stocks, broader indices could find support from:  

1. Bargain Hunting: Wednesday’s selloff (Sensex -0.51%, Nifty -0.61%) left valuations attractive for dip buyers.  

1. Sector Rotation: Investors may pivot to defensive plays like FMCG and pharma amid trade uncertainty.  

1. Currency Dynamics: A weaker dollar (down 1.2% YTD against INR) could buoy export sectors like textiles and chemicals. 

The Road Ahead: Key Triggers to Watch 

1. Tariff Timeline: Will the 90-day pause evolve into meaningful negotiations, or merely delay another clash?  

1. Corporate Guidance: Upcoming earnings (Infosys, HCLTech) will reveal whether TCS’s caution reflects industry-wide headwinds.  

1. Global Risk Sentiment: Sustained demand for gold and bonds signals lingering fear—a headwind for equities. 

Investor Playbook: Navigating the Noise 

• Avoid Overexposure to Tech: Hedge IT holdings with domestic-focused sectors (banks, infrastructure).  

• Monitor Currency Plays: A softer dollar benefits exporters but could pressure INR if capital exits emerging markets.  

• Stay Agile: Use VIX spikes to identify hedging opportunities via options strategies. 

Bottom Line: While the tariff pause offers a tactical reprieve, Indian markets remain at the mercy of global trade nerves. Friday’s session may see early gains, but sustainability hinges on whether policymakers convert this truce into tangible progress—a tall order given the decade-long U.S.-China rivalry. For now, volatility isn’t a bug; it’s the system.