What a week it has been—volatile, uncertain, and full of economic noise. Let’s get into it.

The big story continues to be the escalating tariff war between the United States and China. The situation has intensified with both sides imposing tariffs that are now above 100%. The US has raised tariffs on Chinese goods to 154%, while China has responded with tariffs close to 134% on US imports. These figures make trade between the two giants virtually impossible. Goods simply can’t move under these conditions, and neither side is showing any inclination to retreat. Each is standing firm, confident in its actions.

As direct trade becomes unviable, a flurry of side-deals is now being discussed across the globe. China is reaching out to the European Union and the UAE for alternative trading routes. The EU, in turn, is speaking to the UAE. The US is deepening talks with Mexico. Even India is trying to explore opportunities, though there is nothing definitive just yet. But what’s evident is that the two of the US’s largest trading partners—Canada and China—are no longer on friendly or conciliatory terms, making this a pivotal moment for the global economy.

This situation could very well be the early stages of a massive shift in the global order—something that’s been talked about since the Global Financial Crisis. The era of globalization, which connected world economies into one integrated system, appears to be unraveling. In its place, we are likely to see the emergence of smaller, tightly-knit trading blocs. As this change takes root, countries and companies will be forced to rethink their exposure. A business that once relied on the US for 70% of its revenue will now need to diversify. We saw a similar story with Indian IT firms in the early 2000s. Many of them depended entirely on US clients. When the US economy sneezed, Indian IT caught a cold. Over time, those companies learned to diversify, and now, despite the US still being their largest customer, they are more resilient. The same logic is now playing out globally, and we’re likely to see countries reconsider their dependence not just on US trade but on the US dollar as their sole reserve currency.

Another significant development this past week has been the steady exit of foreign funds from US markets. What’s different this time is that the money isn’t flowing into US Treasuries, which used to be the norm. Earlier, whether it was oil dollars from the Middle East or export earnings from Asia, the money always came back to buy US government bonds. That cycle is breaking down. The foreign demand for US Treasuries is falling off a cliff. If this continues, the US government will be forced to buy its own debt by printing more money—a move that mirrors Japan’s monetary policy. Such actions are highly inflationary. Strangely though, despite this brewing crisis, bond yields aren’t falling. The US 10-year yield is still hovering around the 5% mark. It’s like burning your house down in the hope of reducing your mortgage payments, only to find the mortgage still standing.

Where is the market headed?

Market Overview

Back home, the Indian market has shown remarkable resilience. Just four days ago, we saw a massive gap-down movement. The Nifty dropped from around 23,000 to nearly 21,800. Yet within four trading sessions, that entire gap has been filled. The index has rebounded by over 1,000 points, a recovery that speaks volumes about the underlying strength and confidence in the market. While we haven’t moved higher beyond the pre-fall levels, the sharp rebound indicates that there is serious buying interest at lower levels. This marks the second such recovery episode recently, and unless we get hit with fresh negative data, the markets don’t seem likely to break down easily.

On Friday, the Nifty gained 1.92% for the day.

Nifty Next 50

The Nifty Next 50, also known as Nifty Junior, fully closed the gap and ended the week right where it had started, around the 61,473 mark.

Nifty Mid and Small Cap

Mid-cap stocks rose by about 1.87%, and small-cap indices surged close to 3%. Essentially, all major indices recovered from Monday’s panic-driven low.

Bank Nifty

Even the Bank Nifty, although not fully back, has reclaimed 51,000 after falling to 48,000 earlier in the week. This is still a very respectable level, and the index itself had dropped less than others.

GOLD

Gold continued its explosive run, rising another 1.59% today after two already strong sessions. The current price stands at ₹94,600. This movement is a loud signal that the global financial system is fractured right now. Gold has moved from ₹65,000 in July 2024 to nearly ₹95,000 by April 2025, showcasing the power of this hedge.

Advance Decline Ratio

Market breadth was strong. In the Nifty Bank, all 12 constituents closed in the green. The broader Nifty 500 had 444 stocks advancing against just 53 declines, indicating a healthy breadth.

Heat Maps

Leading the rally were big names like HDFC Bank, Reliance, Kotak Bank, Bajaj Finance, Mahindra & Mahindra, Bajaj Auto, Bharti Airtel, Power Grid, NTPC, and Sun Pharma, all of which gained more than 2%. While IT stocks were relatively flat, the rally was broad-based in sectors such as power, capital goods, commodities, and pharma. Insurance stocks did see some correction, but the overall tone in the Nifty Next 50 space was positive.

Sectoral Overview

The metals sector showed a strong 4.06% move today after facing a brutal 13% decline over the past week. The concern here is that China might dump surplus metal into global markets, which could further depress prices. Real estate stocks rose by 1% today but are still down 8.5% for the week. IT remains under pressure, still 10% down from last week’s levels. Other underperformers included the auto sector, which is down 6% weekly. Meanwhile, FMCG was a lone bright spot, gaining nearly 3% this week. Post the RBI’s confirmation of visible green shoots in the economy and a 6.5% projected growth rate for FY26, investor confidence in FMCG stocks has returned strongly.

Sectors of the Day

Nifty Metal Index

Story of the Day : Trump administration’s tariff:

• Jan 30: 100% tariffs proposed on BRICS.
• Feb 1: 25% on Mexico & Canada, 10% on China.
• Feb 4: Tariffs on China imposed.
• Feb 7–12: Automobiles, pharma, semiconductors added.
• Apr 1–2: “America First” policy cemented; reciprocal taxes expanded.

This has clearly been a tariff-first, diplomacy-later administration. The S&P 500 fell from 6,000 to 4,800, now stabilizing near 5,000—a 20% market cap erosion. NASDAQ too fell from 22,000 to 16,000, now at 18,000. Meanwhile, the US Dollar Index has dropped from 110 to 99.

Ironically, a weaker dollar—while good for exports—means higher domestic inflation, especially with expensive imports due to tariffs. In effect, the US has placed an invisible tariff on itself by letting its currency devalue.

Bond Yields & Bitcoin: Not Playing the Hedge Role

Despite intentions, US 10-year bond yields haven’t dropped significantly—from 4.65% to 4.42%. Meanwhile, Bitcoin has dropped from ₹110,000 to ₹82,000, failing to live up to its “safe-haven” label.

Silver, too, is struggling. After a brief rise earlier this year, it has fallen back, delivering poor returns. Silver, as an asset, is too volatile and not a substitute for gold. Long-term CAGR remains unimpressive.

Oil prices have also collapsed—from $82 to $58, now stabilizing at $63. Oil is often a leading indicator of economic activity, and this collapse signals a likely global recession.

Indian Market Resilience: Holding Steady Amid Chaos

Since the tariff tensions intensified in late March, Indian indices are showing notable resilience:

• Nifty down ~4%
• Nifty Bank & Next 50 down just a couple of percent
• Small caps making up ground fast

Sectors like FMCG (+5%) and consumption stocks are actually up, unaffected by global trade stress. Public sector stocks, capital markets, and PSU banks are steady.

However, real estate, metals, pharma, and auto are feeling the heat. IT stocks are the worst hit—down 15%—due to fears of a US slowdown impacting exports.

Currency Impact and Travel Woes

As currency wars flare up, the Swiss Franc and Euro have surged against the INR:

• Swiss Franc: ₹96 → ₹106
• Euro: ₹90 → ₹98

If you’re planning a Switzerland or Eurozone trip, your travel bill just went up 10%. The rupee is stable vs the dollar (₹86.4 → ₹86.03), but falling against other major currencies. This hurts not just travel, but also imports and overseas education.

Gold: The One True Hedge

Gold has outperformed everything. From ₹2,700 to ₹3,226 in just over two months—a 20% gain. This proves, yet again, that gold protects your portfolio when everything else is collapsing.

I’ve said it for years—buy gold as a hedge against market crashes, inflation, currency risk, and even your own government’s missteps. No other asset class offers this level of long-term protection.

Looking Ahead: A Precarious Path

So, where does the world go from here? The best-case scenario is a handshake between the US and China. The worst case? Prolonged global instability—or worse, war.

China has a 5,000-year legacy and a deep-rooted nationalist ethos. They’re willing to endure pain for national pride. The US? Not so much. This makes the standoff dangerously unpredictable.

India must see this as an opportunity, not just a challenge. It’s high time the government set up a war room to study and act on the emerging trade gaps globally.

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