Opinion Navigating the volatile markets

Over the past month, stock markets in India and around the world have seen a high degree of volatility. On April 2, when US President Donald Trump announced his policy of reciprocal tariffs, the Dow plunged 1,450 points or 3.4 per cent. Markets around the world tanked. By April 7, the BSE Sensex had fallen to 73,137, down from 76,617 on April 2. Over the same period, Brent crude oil fell from $74.95 per barrel to $64.4. But, in the days and weeks after, global markets recovered, although partially, and the Sensex reclaimed the 80,000 level. On Monday, it ended the day at 80,218, up 2.2 per cent year-to-date.

The sharp upturn in global markets has been attributed to Trump pausing the imposition of higher tariffs, allowing countries to negotiate deals with the US. The possibility of early conclusion of an India-US trade deal — US Treasury Secretary Scott Bessent is reported to have said that India could well be the first country to sign one — has buoyed sentiment in India. The dollar is also weakening. The dollar index — which measures the strength of the greenback against a basket of currencies — has fallen from around 111 in January to roughly 99 now. In April, the RBI’s monetary policy committee cut the benchmark repo rate by 25 basis points to 6 per cent, and signalled the possibility of further easing in order to support the economy. Foreign investors have turned optimistic over the past few days, pouring money into the markets.

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The global economy is, however, expected to slow down this year. The IMF has pegged growth at 2.8 per cent, down 50 basis points from its earlier estimate. The Fund has also scaled down India’s growth estimate. Some analysts are, however, more pessimistic, expecting growth to slow down even more sharply. The fourth quarter results of India Inc already point towards subdued revenue and profit growth, with weakness being observed across a range of sectors, spanning consumption, investments and exports. For instance, HUL saw volume and sales growth at 2 per cent and 3 per cent, respectively. Dalmia Bharat saw volumes decline by 3 per cent, and Infosys, which saw a sequential decline in revenues, has pegged revenue growth at 0-3 per cent in 2025-26. The impact of Trump’s tariffs, and the uncertainty they have unleashed, will only be visible in the weeks and months ahead. This will have a bearing on the markets.