Indian markets are grappling with intensifying trade tensions as Finance Minister Nirmala Sitharaman announced on Monday that trade talks had reached a 'plateau', beyond which giving or taking would be 'very, very difficult'. The situation deteriorated further when US Labour Secretary Keith Sonderling suspended eight companies from the Permanent Labour Certification (PERM) programme on Thursday, marking the first step towards employment-based green card restrictions. The list included Indian IT majors TCS, Infosys, Wipro and HCLTech, along with Cognizant, Capgemini, Microsoft and Adobe. According to NDTV Profit, TCS said its applications under the programme had been in single digits over the last two years, while Indian IT companies played down any immediate impact. However, the message extends beyond hiring plans, as Vice President JD Vance described foreign workers on H-1B work visas as 'indentured servants', prompting India's Ministry of External Affairs to call the remark 'unwarranted' and 'deeply offensive'.
Indian equity markets experienced a volatile week, with persistent selling pressure pushing benchmark indices towards fresh lows. According to reports from Moneycontrol, the benchmark index fell sharply on Thursday, slipping below the crucial 22,500 mark but on Friday, markets staged a rebound, recovering some losses as oil prices eased and buying interest returned. However, as the Reserve Bank of India had announced a rate revision of 25 basis points and adopted a calibrated tightening stance, it has revived concerns of inflation and borrowing costs. Rising crude oil prices, elevated US bond yields and continued foreign investor outflows further weakened sentiment. The impact of strong El Nino conditions is now visible on the ground, with Maharashtra declaring drought in 265 of its 358 talukas and Andhra Pradesh in 388 mandals across 21 districts. Morgan Stanley expects margins to fall in seven of 10 sectors in the September quarter, even as JPMorgan and Jefferies still see healthy profit growth.
The upcoming week will be shaped by multiple key economic indicators across major economies. As reported by Moneycontrol, India's headline inflation rate rose to 4.82% in August from 4.45% in the previous month, aligning with market expectations of 4.8%. The September inflation data will be shared on Monday, October 12. Additionally, India's wholesale prices increased 9.92% year-on-year in August, accelerating slightly from a 9.78% rise in July and surpassing expectations of 9.89%. The September wholesale price figures will be declared on Tuesday, October 13. According to DBS Bank, September inflation is likely to gather momentum to 5.7% year-on-year, partly driven by base effects, from 4.8% the month before, with food segments continuing to register gains.
The IT sector received mixed signals with TCS Q2 results broadly in line, easing sector-wide earnings concerns and showing annualised AI revenue growing double digit, forming 10% of revenue. However, the US action to suspend Indian IT majors from the green card programme has created significant uncertainty, though key sectoral players told NDTV Profit that this won't adversely hit profitability or H-1B talent pipeline. Reliance Industries, a Nifty heavyweight, fell about 2.6% on Thursday and dragged the index lower after Elon Musk's comments about Starlink being blocked by 'oligarchs' and questioning whether Ambani was 'the real boss of India'. The US 30-year Treasury yield has reached its highest level since 2002, with the US 10-year Treasury yield above 5.3% tightening financial conditions and increasing borrowing costs. Oil prices have moved higher, with US crude approaching key technical levels after a recent rebound, while gold has recovered from recent lows.
The healthcare sector faces significant regulatory changes as the National Pharmaceutical Pricing Authority approved a 30% cap on trade margins for non-scheduled anti-cancer drugs on Thursday, with the list of covered drugs still to be finalised. This follows the Supreme Court's decision last week to pull up hospitals over mark-ups, citing a cancer drug supplied to retailers at ₹2,700 but carrying an MRP of ₹27,000. Hospital stocks remain volatile as companies argue that administering medication, maintaining cold chains and infrastructure carry real costs. One hospital chief warned that price caps will mean fewer cutting-edge cancer drugs reach the country, while another likened treatment costs to having tea at a five-star hotel. Hospital ROCEs will eventually adjust to price caps, and fighting policy favouring cancer patients appears to be a losing battle.
