RBI Holds Steady Amid Tariff Turbulence: What It Means for India’s Economy and Markets

Hello, Market Reader’s

Countries are making a last-minute dash before Thursday’s looming August 7 tariff deadline, scrambling to lock in trade deals and dodge steep duties ranging from 10% to 41%. Nations like Pakistan, South Korea, and the EU have sealed partial agreements Pakistan’s at a modest 19%, South Korea’s at 15%, and the EU at a baseline 15% while heavyweights such as India (25%) and Canada (35%) remain locked in tense talks. Despite official claims that many rates are "pretty much set," officials admit more tweaks could happen if deals emerge in the coming day. Meanwhile, India–U.S. negotiations collapsed at the last minute, catching New Delhi off guard and leaving a 25% tariff in place a cautionary tale that smaller economies may already be paying the price.

Today’s Global Menu

• Focal Point

• World Markets

• Frontier News

• Crypto World

FOCAL POINT

🧭 RBI Stays the Course Amid Global Noise

The Reserve Bank of India hit pause on its rate moves, keeping the repo rate steady at 5.50%, following earlier aggressive cuts totaling 100 bps. This neutral stance reflects a “wait and watch” strategy as policymakers assess the impact of past easing while navigating rising geopolitical and trade risks.

📉 Inflation has cooled to 2.1%, prompting a downward revision in the full-year forecast to 3.1%. GDP growth is still pegged at a robust 6.5%, providing room for cautious optimism.

💸 But pressure is mounting. The rupee flirted with record lows (~₹87.95/USD) on fears of renewed U.S. tariffs linked to Russian oil imports. RBI’s discreet interventions via state banks hint at concerns over capital flight and investor sentiment.

🔍 Why it matters:
India’s macro stability looks intact but Trump-era trade flashbacks are re-emerging. A weaker rupee, if unchecked, could dent GDP growth by up to 40 bps and slow FDI inflows.

In short: The RBI is playing it safe, but the global backdrop is anything but. Investors should watch liquidity updates, bond yields, and tariff chatter. This "steady" moment might just be the calm before a storm.

WORLD MARKETS

🌏 Pulse: Asian equity indices showed a mix of gains and dips Japan’s Nikkei and Australia’s ASX 200 climbed ~0.6%, while South Korea’s Kospi stalled. Investors are cautiously digesting U.S. service-sector softness and awaiting major quarterly earnings from Honda, Toyota, and Sony, all while pondering potential Fed rate moves.

🧊 Steady: India’s central bank held the repo rate at 5.5% and maintained a neutral policy stance. Sensex slipped over 200 points and Nifty dipped below 24,600 as investors weighed tariff risks and mixed global signals. A signal in the RBI’s tone could now make or break sentiment.

⚙️ Tension: U.S. markets fell after the ISM services index flagged rising price pressures even as activity hovered just over expansion territory. That rare combo is spooking markets with stagflation fears, tightening Fed patience despite still-strong corporate earnings.

📈 Spotlight: Even as benchmarks dipped, AI leader Palantir popped nearly 8% after beating expectations and topping $1B in revenue. On the flip side, companies like Caterpillar flagged tariff-driven margin pains, showing that trade tensions remain very real.

FRONTIER NEWS

🔥 Rebound: Oil prices bounced off a 5-week low as Trump threatened sanctions on Indian buyers of Russian crude jolting market nerves. Brent and WTI climbed as a surprise U.S. inventory drop added to the rally.

💰 Surge: OpenAI is chasing a jaw-dropping $500 billion valuation via a new employee share sale letting insiders cash out before a possible IPO. The move signals booming confidence in the AI giant’s future, as ChatGPT continues to dominate.

⏳ Countdown: Markets are bracing for a potential Fed rate cut in September after soft job data, but Wall Street giants urge caution. Despite recession whispers, sticky inflation and resilient hiring may keep the Fed on pause for now.

📦 Fallout: China - U.S. trade just hit a 16-year low amid sky-high tariffs. Imports from China plunged, but America’s trade deficit barely moved thanks to Taiwan, Vietnam, and others filling the gap. Tariffs reshaped trade, but didn’t shrink the bill.

CRYPTO WORLD

🚨 Crypto Correction: Stagflation Jitters Shake the Market

The crypto market turned sharply red on August 6 as stagflation fears rattled global sentiment. With U.S. service sector activity slowing and prices stubbornly high, investors pulled back. Bitcoin slid to ~$113K, while XRP tumbled ~4%, dragging altcoins along in a broader selloff.

This isn't just volatility it’s a macro moment. As inflation proves sticky and growth shows cracks, risk assets like crypto are caught in the crossfire. If the Fed delays its anticipated rate cuts, Bitcoin may retest the $100K floor a level many traders hoped we’d left behind.

🧠 Why it matters:

• The recent rally might have been more sentiment than substance.

• Institutional investors could seek shelter in treasuries or cash, not coins.

• Options activity might soon spike in favor of downside protection.

📉 Watch for:

• Derivatives data signaling bearish bets

• Fed commentary that could steer the trend

This correction might be a stress test for crypto’s maturity. Is Bitcoin still a hedge or just another risk asset?

The coming weeks will reveal whether this is a healthy reset or the start of deeper pain. Either way, the $100K psychological line is back in play.

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Thanks for reading.

Until tomorrow!

Hanoomaan Global Markets team

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