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Informist, Friday, Feb. 27, 2026

By Eshitva Prakash

MUMBAI – Uncertainty on the US import tariff on India and the geopolitical situation in West Asia are likely to push the benchmark equity indices lower next week. Analysts are worried about how the situation is developing in Iran after the third round of talks between the US and the West Asian country failed to result in a deal. On the trade front, they see the risk of higher tariffs on India in case of a renegotiation with the US. Information technology companies will be in focus after their shares continued to be the biggest drag on the headline indices this week. Analysts expect investor concern over artificial intelligence tools to dissipate gradually, which may help these stocks to rise again.

Union Commerce Minister Piyush Goyal Friday said the situation is evolving after the US Supreme Court's tariff ruling and India is watching the developments closely, according to various media reports. He said the joint statement released when the interim trade deal framework was signed offers flexibility and if the circumstances change, the deal will be "rebalanced".

"Goyal's statement added even more uncertainty around US tariffs, since several exporters were assuming that India will continue with the 18% import tariffs, decided in the framework signed earlier this month," Sunny Agrawal, head of research at SBI Capital Markets, said.

With Trump threatening to increase his import levy on countries "playing games" with already signed deals, India runs the risk of receiving a less favourable deal, Agrawal said. He added that even if Trump were to raise blanket tariffs to 15% from 10% currently, it wouldn't make a lot of difference to labour-intensive sectors. "I think traders understand that Trump will keep changing the goal post," he said.

Agrawal, however, is bullish on the strength in certain pockets of the market, noting that foreign investors have been investing in public-sector banks because of healthy earnings visibility, while they are pulling out of risky sectors such as information technology. "The IT (pack) is pulling the markets down, but this also means that their valuations have become very comfortable recently," he said. "Going forward, I think companies will likely give contracts to software players that have integrated artificial intelligence tools in their services, rather than to pure-play AI players," he said. Good relationships between IT majors and US companies and a long history of timely execution by domestic IT companies means AI companies are likely to piggyback on IT services companies for future contracts, the analyst said.

Echoing this view, Rishubh Vasa, research analyst at Indsec Securities & Finance, said IT companies will benefit from AI integration as their offerings will be priced higher owing to the value addition. The first half of the financial year 2026-27 (Apr-Mar) will likely be spent in making deals and finding AI services contracts, which is why the benefit from AI will be limited, he said. In the best-case scenario, assuming companies start getting AI-ready at a faster pace, the benefits of AI services will pour in from the second half of FY27 for domestic companies.

On the geopolitical front, the US has permitted non-emergency government personnel and family members to leave Israel over safety risks amid growing concerns about the risk of a military conflict with Iran, Reuters reported. A conflict with Iran will result in a logistical disruption in the strait of Hormuz, which will drive up crude oil prices for India exponentially, analysts said. Some analysts believe Iran will not go to war with the US, but others have not discounted the US taking unilateral action against the West Asian country. The April futures contract of Brent Crude shot up over 2% to $72.30 per barrel on the Intercontinental Exchange at 1802 IST.

The technical view on the headline indices is not very encouraging either, with several analysts seeing further pain. However, despite the negative trend, the fall in the Nifty 50 is expected to be contained to the 25000 level. The 50-stock index is seen facing resistance at 25350 levels, Rupak De, technical analyst at LKP Securities, said. Friday, the Nifty 50 shed 1.3% to end at 25178.65 points. The BSE Sensex closed at 81287.19 points, down 1.2%.  End

Edited by Rajeev Pai

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