Subdued start to earnings season

The major U.S. stock indexes ended last week slightly lower, with the tech-focused Nasdaq Composite Index showing the strongest resilience. Although tariff-related news dominated headlines, the market’s response was more subdued compared to earlier tariff announcements. U.S. President Donald Trump announced 25% trade tariffs on key trading partners South Korea and Japan, along with varying tariff levels on other nations such as Canada, South Africa, Thailand, and Malaysia. Additionally, he revealed plans for a forthcoming 50% tariff on copper, which caused an immediate surge in U.S. copper futures prices. Dow Jones slipped 1%. The S&P 500 Index and Nasdaq Composite lost 0.3% and 0.1% respectively.

Large U.S. banks and tech firms are set to report earnings this week, with analysts watching for guidance on how companies plan to navigate tariff-driven cost pressures. The market’s attention is also on the upcoming Consumer Price Index release, which could reveal early signs of tariff-related inflation. Despite the pullback, major indices remain near all-time highs, supported by robust earnings growth and resilient consumer demand. However, the outlook is clouded by policy uncertainty, with investors cautious as the effects of tariffs and potential Fed action play out in the coming weeks.

The Indian stock markets reversed the gains from the previous week and ended in the red, as global trade uncertainties and a weak start to the domestic earnings season. Investors continued to wait for a trade deal between the US and India. IT bellwether TCS kicked off the earnings season with subdued results, which impacted market sentiment. Key earnings slated to be announced today include those from HCL Technologies, Ola Electric, Rallis India, Tata Technologies, and Tejas Networks. Nifty violated the crucial supports of 25,331 and 25,222 and closed below its 20-day moving average (20 DMA). The short-term trend has turned cautious for the Nifty, where the next support is seen in the band of 24,900-25,000. On the higher side, the previous support level of 25,331 could now interchange its role as an immediate resistance. Indian markets are poised to open mildly lower today on the back of weak cues from the U.S. and Asia.

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Source: HDFC Securities Prime Research