Finsphere

Dear Clients and Stakeholders,

As we move into the final stretch of what has been an eventful year, Indian equity markets have regained steam. Nifty marked its third straight monthly gain in November, inching up 1.87%, amid growing optimism about the country's economic growth trajectory and better-than-anticipated earnings from corporate India. Sentiment also improved amid increasing market buzz that India and the United States may be close to agreeing a mechanism for handling reciprocal tariffs. India’s commerce secretary Mr. Rajesh Agarwal confirmed that India talks are progressing in two fronts – a quicker arrangement to address reciprocal tariffs and a longer-term Bilateral Trade Agreement (BTA). With the revamped indirect tax structure (GST 2.0) and earlier announced direct tax, domestic consumption is expected spearhead economic growth in India especially amidst an environment of interest rate cuts and benign inflation.

Globally, President Donald Trump’s hostile tariff stance which had dominated the headlines for much of the year took a more constructive turn with his visit to Asia in November aiding resolution to long standing trade negotiations with crucial trading partners such as Japan, South Korea and most importantly China. With China and US embroiled in a tariff standoff for much of the year, the meeting between President Trump and President Xi Jinping in South Korea turned out to be the most consequential leg of his trip to Asia. After fruitful negotiations, US agreed to reduce the additional fentanyl-linked duties on Chinese imports to 20%, effectively lowering the aggregate US tariff burden on Chinese goods to 47% from 57%. In return, China agreed to delay by a year its recently announced export controls on rare earth minerals and high-strength magnets—materials critical to aerospace, automotive, and defense manufacturing—which have been central to Beijing’s strategic leverage in trade negotiations.

In the United States, the federal government which had remained under shutdown for 43 days – the longest in history – reopened on November 13 after a short-term funding bill which guarantees funding up to January 2026 received the President’s assent. Despite the prolonged shutdown, the Democrats, who had vehemently fought for guaranteed extension of expiring health insurance subsidies that affect around 24 million Americans, failed to secure the terms of their demands. Instead, senators made a deal to hold another vote on the tax credits at the end of the second week in December.

With the shutdown halting most non-essential operations, investor - devoid of macro prints – were left guessing on the prospects of a rate cut by Fed in December. This kept the markets volatile especially with Fed’s earlier comments highlighting inflation risks from US tariffs as a cause for concern even as labour market showed signs of fatigue. These factors ensured that markets remained volatile with the Dow Jones inching up 0.32% while the S&P 500 edged up 0.13% in November. However, concerns over “AI bubble” drove investors to book profits resulting in the tech-heavy Nasdaq plummeted 1.51%.