Indian Bonds Defy the Global Bond Selloff With Central Banks Support

(Bloomberg) — Before the trading day starts we bring you a digest of the key news and events that are likely to move markets. Today we look at:

Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. Nifty futures point to a positive start as traders return from a local holiday, but markets may face a volatile session as Asian stocks are trading lower. Optimism that boosted Asian markets on Thursday gave way to renewed unease over the likely damage to global growth from an escalating US-China trade war — despite President Donald Trump’s surprise tariff reprieve. Meanwhile, TCS kicked off the crucial fourth-quarter earnings season on a soft note, missing expectations.

TCS results disappoint as tariff storm deepens tech woes

Tata Consultancy Services kicked off earnings season with a fourth-quarter net income that was below analysts’ expectations, and management alluded to a slowdown that is impacting the visibility of revenue growth. According to Morgan Stanley, the miss was largely driven by a higher-than-expected decline in Indian business from last quarter. Weakening domestic growth is not a good sign for IT giants, particularly as global technology spending remains uncertain amid a dull economic outlook and the threat of disruptive tariffs from Trump, which can lead to further cuts in discretionary tech spending in anticipation of rising costs.

Pharma stocks no longer a safe place to hide

Drugmakers across the globe took a hit Wednesday after Trump announced plans to unveil tariffs on pharmaceutical imports to the US. The sector, traditionally a hiding space for investors during market turmoil, has suddenly turned into a pain point, with tariffs clouding the earnings outlook. India’s Nifty Pharma Index has already slid 16% from its peak earlier this year, and unless domestic sales deliver an upside surprise, further weakness appears to be in store.

India stands tall amid global bond selloff

Indian bonds defied a staggering global bond selloff as the RBI decisively opened the monetary spigots to support the economy. The benchmark 10-year yield fell as much as four basis points Wednesday after the central bank lowered rates and adopted an accommodative stance. The rally stood in stark contrast to US Treasuries, where the 10-year yield surged as much as 22 basis points as Trump’s sweeping tariffs took effect. With analysts predicting further declines in Indian bond yields, borrowing costs across the economy are set to fall, helping the country weather the global trade storm.

Three great reads from Bloomberg today:

The Nifty is perched just above its 100-day moving average on the weekly chart, testing a long-standing trend line that has supported the index for decades, barring major economic shocks. The index has ripped higher after dipping below this key level during events such as the 2008 global financial crisis, the European debt turmoil, and the pandemic-induced rout. The Nifty reversed course from near this support just last month, before Trump’s tariffs announcements sparked a downturn. Now, the Nifty is once again hovering near this critical support zone.

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–With assistance from Chiranjivi Chakraborty, Savio Shetty and Kartik Goyal.

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