US Markets See Worst Decline In A Year | What This Mean For Indian Markets | Explained

本站添加: 2026-06-07

[00:00:00]The big question now is how should uh Indian investors really interpret these global cues and is this merely a knee-jerk reaction or does it signal a more challenging phase ahead for the risk assets joining us to discuss the implications for Indian markets is Dhan Jasa co- ahead of equities and head of research he'll be joining us shortly but Mahima let me come to you uh you know seeing u the markets today especially the global markets So what should we really anticipate for Monday?

[00:00:32]>> Right.

[00:00:33]>> So what's happened uh you know is that overall on Friday US markets uh you know closed um pretty much lower. The NASDAQ almost closed for you know less than 4%.

[00:00:43]Uh you have your tech heavy uh stocks that kind of weighed on the NASDAQ index. You had S&P 500 also dropped nearly three odd percent. U Dow Jones Industrial Average also fell by 1.4%.

[00:00:56]Now was what caused this? uh right this was because that US jobs data uh came out better than expected they added around 1 lakh 72,000 job uh now because of this what happens is that the expectations are that this raises the worry that overall Federal Reserve uh will keep interest rates at that higher level will not go ahead and cut interest rates and that is something that the street did not like and that's the sell-off that we saw and because of that uh you know uh rising you know worries in terms of where inflation goes we've seen Treasury yields also surge. So that's the entire reason as to why we saw a huge selloff in US markets. Now we've always seen that these um you know selloffs that we see in global markets see a rub off effect in terms of Indian markets as well. Plus we saw gold um closing 3% lower, silver closing 8% lower as well as of course crude was a slight positive there because it closed around 2% lower. But there's also gift nifty which closed around 1.5% lower.

[00:01:54]That's the cue as to why Monday markets could be under pressure.

[00:01:58]>> We are being joined by Dhanjay Sa co ahead co- ahead of equities and even head of research strategy and economics at systematics. Welcome to the show Mr. Dhanjay.

[00:02:09]>> Thank you. Thank you for having me.

[00:02:11]>> Yes. So uh Dhanjay when we see a combination of a sharp NASDAQ selloff and also weakness in the commodities and even spike in bond deals. So does this look like a temporary riskoff move or something investors should uh really take more seriously here?

[00:02:30]>> So I think the key issue out here is that uh you know if you look at the US market the labor market has actually thrown out a fairly strong set of numbers. uh you have about 172 uh,000 jobs added uh in the last uh last report worsened expectation of uh you know almost like double of what was expected and that essentially has triggered a sense that the inflation would actually rise in the in the context of the tight labor market and it's already close to headline inflation is close to 3%. And uh there's likelihood of US Fed increasing rates. I think there was expectation that US would cut rates. I think that has actually been reversing.

[00:03:13]So that's one piece of the of of the of the story. The other piece is of course that uh with respect to the AI uh boom that has been there in the US market, the expectations are actually changing with the Broadcom uh uh results actually missing uh missing expected uh uh you know sales with respect to the chip uh sales has actually been that has been a major uh disappointment versus the expectations that we're building in. I think there's a broader context uh that is being challenged now with uh Broadcom also talking about unchanged uh forward guidance u despite the fact that the hyperscalers have actually guided for much larger allocation. So clearly with respect to the semiconductor and the chip manufacturing relating to AI there are sort of question marks now. So we know that the US markets have been largely driven by the AI boom. uh with respect to the technology sector the uh the profit growth was has been about 30% plus so I think that is getting questioned and that essentially is a collective uh factor that has been dragging down the US markets now from an India standpoint this is important from two standpoint one is that uh you will have the US yields rising we know that US 10ear is is above uh it's not the 4.5% and uh 30-year bond is above above 5% in the in the shorter term also rising and in anticipation of a rise in Fed rate that there is a possibility of a stronger dollar in response. So I think that is actually impacting the overall sentiment from a global standpoint and that reflects in the a certain correction in the in the gold prices. So you have a sort of context of earnings uh uh uh disappointment with respect to the technology space, higher risk-free rate, all of that translating into lower uh valuation for the technology sector and it has got a repercussion for the global markets as well.

[00:05:18]>> Absolutely Mr. SA hi mahima also joining in you know you've put that into perspective very well but considering that you know we've seen such a significant rally in terms of US markets on the back of the AI move right uh plus uh back in home on Friday we had some relief at least in terms of where there was you know a cut in terms of long-term capital gain tax on government securities if not equities right um all of these combined together the only question right now that investors ers have is that when are we expecting foreign fund flows coming back to India?

[00:05:55]Um considering all of this into perspective, do you think that it's now time that you know that at least foreign investors will start looking at um you know getting back those funds into India especially when this earnings cycle especially is at uh you know in the midst of an upcycle.

[00:06:15]So I would say that uh that there can be an expectation that can be built uh that if there is a certain uh sort of tempering of expectation with respect to the AI and a lot of people thought that because of the AI boom in other places India's actually been seeing lesser allocation with respect to fii flows. So that uh that can be an sort of expectation that markets can build up also in the context of what RBI announced last week uh to support uh capital flows. Uh I would say that uh see when there is a sort of a broader correction in the US market there is a positive correlation even with the with the Indian market. So I would say whether uh if if you have a correction in the uh technology space, it's quite possible that the IT space will also see a certain amount of uh resonance. Uh with respect to what RBS announced last week, I think uh there has been uh uh removal of the long-term capital gains also the uh withholding tax rates also been removed. So these are demands that were that were there earlier on. So there is expectation that FIFOs can improve. But I would say that this is this can be fairly uh modest in terms of impact. I think the larger impact is with respect to the N FCNRB deposits where the RBI is giving a sort of a subsidy in a way for the uh for the uh for the exchange rate coverage that banks will need to sort of bear. So I think uh that is the context but I think core issue is whether our earning cycle will improve going forward in the context where we have increased the energy prices we think that the earnings growth might still be uh scaled down as we see FI27 >> correct got it got that view and uh you know one last question uh miss Mr. that uh considering that if somebody's looking at uh you know particular sectors uh right now uh because we seeing increase in capeex in terms of where energy goes where data center goes where semiconductors go right um if one were to look at as to uh some specific sectors to look at right now in terms of investment what would uh those be like and where should one put their bets in >> so you rightly pointed out I think in the context of the geopolitical uh upheavalss that we are seeing I think this can continue. You still can see a sort of uh tariff war intensifying. I think we are seeing uh you know news bites from the US with respect to India which is not very very friendly from a trade standpoint. So I think these things will continue to be there. You have a rise in uh uh energy prices that is there. So I think a lot of people might invest in energy saving, energy optimization sectors, EVs. Uh we have flexif fuel thing that is coming up and there is also coal gasification theme that the government is talking about. So a lot of those things can happen especially also in the in the nuclear energy space. There are a lot of uh stuff that is happening and the other piece that can actually see a sort of tailwind over longer period of time is defense. We know that global uh you know allocation for defense has been of the order of $2.9 trillion in uh 2025 up from 2.7 2.8 in the previous year. So we think that in the geopolitical context larger large large investments globally will happen in the defense space and a lot of Indian companies are actually geared to towards uh towards benefiting from that. uh other space I would say uh would be uh the pharma space and I would say even the uh you know the health care space in general including hospitals and all can do relatively better.

[00:10:10]>> Then what sorry one one more last quick take in terms of AI geopolitical situation energy or is it the earnings upcycle that will you know set things straight for foreign investors to come back to India. So I think it is all about earnings I would say. Uh we've seen a sort of 20% growth till FY24.

[00:10:31]After that it is kind of flagged and we are seeing a fair fairly flattish uh performance of the Indian markets at a at a if you look at the general uh index performance over the last one and a half years it's hardly anything and and uh accounting for the repeat appreciation there is negative performance. So I think a a significant uh uh you know variable to really look at is the earnings growth and uh we need to really deliver above 15% growth for us to uh attract uh attract fii flows at this juncture valuations the earnings matrix are not very favorable when you do a global comparison still I would say >> all right Mr. Dhan, thank you so much for being there with us on the show and sharing your insights with us. Thank you so much.