# india's big bank bounce, us-china trade tensions, and tech sector reckoning

what matters now

Indian markets staged a remarkable comeback with banking stocks leading the charge – Nifty Bank hit an all-time high above 55,000, driven by stellar performances from HDFC Bank and ICICI Bank. Global markets remain on edge as U.S.-China trade tensions create cross-currents that are reshaping investment flows and commodity prices. Tech stocks face selling pressure amid tariff concerns and disappointing earnings from major IT players. Gold continues its meteoric rise, storming past ₹96,000 per 10 grams as investors seek safe-haven assets. Meanwhile, structural shifts in defense, manufacturing, and employment markets suggest India is positioning itself for long-term growth despite near-term volatility.

Indian banks surge on robust earnings as Nifty Bank reaches record high

The Indian banking sector is experiencing a remarkable renaissance, with the Nifty Bank index surging past the 55,000 mark for the first time in history. This rally is primarily fueled by impressive quarterly performances from heavyweight private banks. HDFC Bank rose nearly 2% to hit a 52-week high of ₹1,950.70, while ICICI Bank gained approximately 1% to reach ₹1,436.00. The latter reported an 18% year-on-year jump in profit to ₹12,630 crore, with HDFC Bank posting a 6.7% YoY increase to ₹17,616 crore.

What's particularly notable is the banking sector's improved asset quality metrics, with declining non-performing assets across major institutions. ICICI Bank's net NPA ratio improved to 0.44%, while Yes Bank – once the problem child of Indian banking – showed continued recovery with a 63.3% YoY surge in net profit to ₹738 crore and a reduction in net NPA from 0.5% to 0.3%. The sector's resilience is remarkable given the headwinds faced over recent years.

The financial landscape is further bolstered by supportive monetary policy from the Reserve Bank of India, which has shifted to an 'accommodative' stance with 50 basis points of rate cuts in 2025 and expectations of an additional 100 basis points ahead. This has created a favorable environment for banking operations, with improved liquidity conditions supporting both lending and deposit growth. With FII inflows reaccelerating and domestic economic indicators remaining robust, the outlook for Indian banking appears increasingly promising despite global uncertainties.

U.S.-China trade tensions reshape global investment flows and commodity markets

The escalating trade conflict between the U.S. and China continues to send ripples through global markets, creating what market veteran Swaminathan Aiyar describes as a deceptively calm "90-day lull" before the next storm. China's recent restrictions on rare earth mineral exports – critical components for automotive manufacturing – represent a calculated escalation that threatens to disrupt supply chains beyond just U.S. markets.

These tensions have triggered notable shifts in investor behavior, with significant capital moving away from the traditional "America-first" investment strategy. The U.S. dollar has declined to its lowest level in three years, while gold has surged to a record $3,361.53 an ounce, reflecting growing demand for safe-haven assets. Simultaneously, the Japanese yen and euro have emerged as beneficiaries, appreciating 6% against the dollar over the past month.

The geopolitical chess match is further complicated by progress in U.S.-Iran nuclear talks, which temporarily eased oil supply concerns and pushed Brent crude down to $67.26 per barrel. Meanwhile, institutional investors like Fidelity and Goldman Sachs are pivoting toward Asian consumer stocks, particularly Chinese firms, anticipating they will benefit from government stimulus while providing shelter from trade turbulence. This fundamental realignment of global investment flows signals a potential long-term shift in market dynamics that transcends the current 90-day negotiation window.

Tech sector faces headwinds as FIIs sell off and earnings disappoint

India's technology sector is weathering a perfect storm of challenges, with Foreign Institutional Investors (FIIs) offloading a staggering ₹13,828 crore worth of IT stocks in just nine days. This dramatic sell-off has pushed the Nifty IT index down 28% from its peak, with all constituent stocks struggling amid bearish sentiment. The sector's woes are compounded by disappointing quarterly results from industry leaders – TCS reported a 1.7% decline in net profit, while Infosys saw a steeper 11.7% drop in consolidated net profit to ₹7,033 crore.

The earnings outlook doesn't offer much immediate relief, with Infosys projecting its lowest revenue growth guidance in over a decade at just 0-3% for FY26 (excluding pandemic periods). Wipro expects a sequential drop of up to 3.5% in IT services revenue for the upcoming quarter. Industry executives cite client hesitancy regarding wage hikes and project commitments, largely in response to uncertainties stemming from U.S. tariff implementations.

This technological turbulence contrasts sharply with investor behavior in other sectors. While fleeing IT stocks, FIIs have increased allocations to telecommunications (₹2,137 crore inflow) and FMCG stocks (₹587 crore inflow in early April). Market experts suggest this rotation reflects a strategic pivot toward sectors with stronger earnings visibility and domestic consumption resilience – a pattern likely to persist as global trade dynamics remain unsettled and the technology spending environment stays cautious.

Gold hits record high as investors seek refuge amid dollar weakness

Gold prices have spectacularly surged past the ₹96,000 per 10 gram mark, establishing new records amidst heightened global economic uncertainties. June futures on the Multi Commodity Exchange (MCX) jumped ₹1,500 or 1.4% to reach ₹96,747, continuing a broader upward trajectory that has seen the precious metal gain over 26% (approximately ₹19,000) since the beginning of 2025.

This remarkable rally is primarily driven by a combination of factors working in gold's favor. The U.S. dollar index has plummeted to a three-year low, significantly enhancing gold's appeal for holders of other currencies. Simultaneously, escalating U.S.-China trade tensions have intensified fears of potential recession and triggered a classic flight to safety. President Trump's criticism of Federal Reserve Chair Jerome Powell has further undermined dollar confidence while bolstering gold's traditional role as a hedge against monetary uncertainty.

Despite the soaring prices, physical demand for gold has been notably muted in India as consumers balk at higher costs. Technical indicators suggest caution may be warranted – the metal is trading near a critical resistance zone of $3,350-3,400 per troy ounce, with the Relative Strength Index (RSI) showing signs of negative divergence. Market experts recommend a measured approach, noting that while the long-term outlook remains positive, gold's current overbought conditions could lead to short-term volatility. For investors, the key question becomes whether this is simply a cyclical peak or part of a more sustained structural shift toward precious metals in an increasingly uncertain global landscape.

Chief Economic Advisor projects 8 million jobs annually for "Developed India" vision

India needs to generate 8 million jobs annually over the next 10-12 years to achieve its ambition of becoming a developed nation by 2047, according to Chief Economic Advisor V. Anantha Nageswaran. Speaking at the Columbia India Summit 2025, he outlined the economic strategy required to navigate emerging global challenges that threaten conventional employment pathways, particularly the shift toward artificial intelligence, technology, and robotics, which could jeopardize entry-level employment opportunities in IT-enabled services.

A key focus of this development agenda is boosting manufacturing's contribution to GDP while addressing the manufacturing dominance achieved by countries like China. This comes as India's export contribution to GDP growth has declined from approximately 40% (during 2003-2008) to about 20% currently, with forecasts suggesting further reductions. The CEA emphasized that sustaining annual growth of 6.5% over the next decade would be a significant achievement, especially amid ongoing geopolitical tensions.

Nageswaran's frank assessment presents both challenges and opportunities for India's economic trajectory. While the path to developed nation status involves complex hurdles, including international competition and technological disruption, India's demographic advantage – its young population – remains a potential growth catalyst. The strategies outlined suggest a dual approach: integrating advanced technologies while maintaining focus on labor-intensive policies that can generate the millions of jobs needed. This balancing act will be crucial for achieving the "Viksit Bharat (Developed India)" vision while ensuring inclusive growth in an increasingly competitive global economy.

Changing investment patterns: Market strategists advise sector rotation amid volatility

Market experts are advocating strategic sectoral shifts as Indian markets experience heightened volatility. Sandip Sabharwal recommends a cautious day-by-day approach, highlighting that India's closure during global market downturns provided a buffer for investors. He suggests focusing on high-quality entities in banking, infrastructure, and telecom, while identifying IT and pharmaceuticals as potential contrarian opportunities. Notably, he remains wary of real estate stocks, suggesting most favorable factors are already priced in.

Devang Mehta echoes similar sentiments, pointing to sectors focused on discretionary consumption, BFSI (Banking, Financial Services, and Insurance), and infrastructure as sources of stability and growth. His analysis indicates that recent global trade tensions present a strategic opportunity for India to enhance its manufacturing sector, potentially playing a more significant role in the global economy as part of the "China+1" strategy.

Ajay Srivastava offers perhaps the most targeted advice, emphasizing that while large-cap stocks provide stability, significant growth opportunities or "alpha" lie within mid-cap companies. He notes the surprising performance of the Nifty Bank index despite subdued earnings growth from key players. This perspective aligns with broader observations that high-beta stocks (those with greater volatility) have seen average declines of 32%, while low-beta stocks have shown greater resilience with average declines of around 26%.

These diverse perspectives converge on a central theme: the current market environment demands selective positioning rather than broad-based exposure. With 92% of high-beta stocks falling up to 66% from their peaks, investors are increasingly advised to focus on quality, valuation, and sectoral trends while maintaining the flexibility to adjust as global and domestic conditions evolve.

Defense sector emerges as major investment opportunity with $130 billion potential

India's defense sector is positioning itself for unprecedented growth, transforming from a major importer to a potential global arms powerhouse with a $130 billion opportunity over the next five years. According to Nuvama Research, which recently initiated coverage on the sector, the Air Force and Navy are expected to lead demand, particularly in Defense Electronics – projected to grow 7-8% annually.

The investment thesis is compelling: private defense firms are forecast to outperform public sector undertakings (PSUs), with earnings growth rates of 25-40% versus 15-18% for PSUs. This growth is supported by a robust order pipeline, including 97 LCA Mk1A fighter jets, 120 Mk2 aircraft, 126 AMCA advanced fighters, and 110 MRFA combat aircraft for the Air Force, alongside major naval acquisitions such as 6 P-75I submarines.

From an export perspective, the sector presents additional opportunities. With NATO countries increasing defense spending and European factories facing challenges related to underinvestment and talent shortages, Indian manufacturers stand to benefit as cost-effective, technologically capable alternatives. Nuvama highlights that 60-65% of India's defense exports already come from private players, a trend expected to continue.

Defense Electronics emerges as a particularly attractive subsector, with growth prospects 1.5-2x that of overall defense capital expenditure. This area encompasses high-value components like radars, avionics, AESA systems, and electronic warfare suites, benefiting from both budgetary support and technological advantages. This combination of domestic and export potential, coupled with government policies favoring indigenous production, suggests the defense sector may represent one of the most compelling structural growth stories in the Indian market landscape.

Corporate activity heats up with acquisitions and expansion plans

The Indian corporate landscape is buzzing with strategic moves as companies reposition for growth. Devyani International, the operator of KFC and Pizza Hut in India, is set to acquire Biryani by Kilo in a deal that has sent its shares soaring by 4%. This acquisition taps into the large yet fragmented biryani market, with the target company demonstrating impressive revenue growth at a 55% CAGR over five years to reach approximately ₹3 billion. Emkay Global has upgraded Devyani's stock to "buy" with a target price of ₹200, citing anticipated returns from this acquisition.

In the ports sector, Adani Ports announced the acquisition of Australian NQXT terminal in a substantial ₹20,500 crore non-cash deal. While analysts from Nuvama expect this to add 6-7% to Adani Ports' consolidated volume, revenue, and EBITDA in FY26, they note it may cause a 2% EPS dilution in the short term. The move represents Adani's continued international expansion despite recent controversies.

Meanwhile, JSW Energy is preparing to unveil its "Vision 3.0" in the coming months, adjusting targets for installed capacity and energy storage until 2030. The company is at an advanced stage of commissioning India's largest Green Hydrogen project under the PLI scheme, expected to generate 3,800 tonnes of Green Hydrogen and 30,000 tonnes of Green Oxygen. This project, set to commission in Q1FY26, underscores the growing emphasis on renewable energy infrastructure.

On the manufacturing front, Interarch Building Solutions has secured India's largest Pre-Engineered Building (PEB) order worth over ₹300 crore for a tire manufacturing facility in Gujarat, covering a development area of 3 million square feet. These diverse corporate developments reflect the ongoing evolution of India's business ecosystem, with companies actively pursuing expansion through both organic and inorganic routes.

quick snippets

• IT Hiring Plans: Despite disappointing quarterly results, TCS plans to hire 42,000 fresh graduates for FY26, signaling long-term optimism despite short-term challenges in the sector.

• New Product Launch: Motorola has entered the laptop market in India with Moto Book 60, priced at ₹61,999 (Intel Core i5) and ₹69,999 (Intel Core i7), featuring a 14-inch screen with 2.8K resolution, available from April 23, 2025.

• OLA Electric Regulatory Issues: Maharashtra government has ordered the shutdown of 104 Ola Electric stores operating without trade certificates, with 43 already closed and 214 scooters confiscated.

• Currency Movements: The Indian Rupee has appreciated by 33 paise to 85.05 against the U.S. dollar, supported by a decline in the U.S. dollar index and positive domestic equity performance.

• Telecom Subscriber Data: Bharti Airtel added 16.86 lakh users in January (up from 10.33 lakh in December), while Reliance Jio's additions slowed to 6.86 lakh (down from 39.06 lakh). Vodafone Idea continued to struggle, losing 13.38 lakh users.

• China's Economic Stance: China has maintained its benchmark lending rates for the sixth consecutive month, with the one-year loan prime rate at 3.45% and the five-year rate at 3.95%, reflecting a cautious monetary approach.

• Commodity Update: Oil prices fell approximately 1% as progress in U.S.-Iran nuclear talks eased supply concerns, with Brent crude dropping to $67.26 per barrel and WTI at $64 per barrel.

• Corporate Results: Just Dial reported a 36.2% YoY increase in net profit to ₹157.6 crore for Q4, driven by effective merchant acquisition strategies and enhanced market penetration in urban and semi-urban areas.

• DCX Systems Joint Venture: The company has signed a joint venture with Israel's ELTA Systems to form a company in India for manufacturing radar systems under "Make in India". DCX will hold 37% and ELTA 63% in the venture.

• BHEL Performance: The company posted a 19% YoY growth in revenue at ₹27,350 crore for FY 2024-25, with record order inflows of ₹92,534 crore, taking the total order book to ₹1,95,922 crore.

The global economic landscape continues to evolve with remarkable speed, creating both challenges and opportunities for investors. As trade tensions persist and monetary policies adapt, markets are increasingly rewarding strategic sector allocation over broad exposure. India's relative economic strength, coupled with financial sector resilience and emerging growth areas in defense and manufacturing, suggests the potential for continued outperformance despite global headwinds. However, vigilance remains essential as tariff impacts, technological disruption, and changing investment flows reshape the investment terrain in profound and sometimes unpredictable ways.