Will July 9 deadline bring major trade deals or market instability? Ajay Bagga answers

In anticipation of that, you could see a correction in the first week of July. July 9th is the D-Day and in anticipation of that, if there is nothing coming, you could see. But the way they bent their knees to the Chinese in Geneva was a big surprise and you saw the huge rally in the market. The same way with the EU, one day he said 50% tariff, then the EU commissioner called him up and all the prime ministers of the European Union from Denmark to France to Netherlands, said we want de-escalation. We want to continue to deal with the US. We are looking for a deal.


The Irish prime minister said whatever the US wants, we will give them. We want a deal to happen. So, deals will happen. Today the White House has made a statement that they expect a India deal shortly. I am expecting something to come out. They will do some demonstration effect with what they have done with the UK, with India, and they will do one with Japan.


Trump is meeting the Japanese prime minister on the G7 Summit sidelines. Expect Japan to come back with something. Japan wants zero tariffs because they are a high-expense economy and their automobile industry is at risk with 25% tariff. They have a 700% rice tariff which the US wants to remove, but which is politically very difficult. So, there will be some give and take and we will see a Japanese deal, an Indian deal, Korean deal, Vietnamese deal. Vietnam has allowed two Trump towers.

The Trump organisation is setting up golf courses and hotels in Vietnam. So, all the red carpet has been rolled out for the Trump administration and the Trump family. Expect a Vietnam deal also before the July deadline and the world will get a 10% tariff.

The weaker dollar is taking away our overhang. So, Trump wants a weaker dollar and the way he is doing work this year, the US growth goes down to about 0.5% from 2.5% last year. Next year, the forecast is about 1.5-1.6%. So, slower growth in the US, a weaker dollar that takes away a big overhang from RBI not being able to cut rates more furiously.


Some marketmen are moving towards a 50 basis rate cut on 6th June. There is a very big possibility that the RBI could do that and it will really catch the imagination of the markets. Again, we will see the move by Monday, Tuesday coming up. Tomorrow, I am expecting the banking index to react to the IPO of a big bank's subsidiary being approved and that will help the sentiment tomorrow. I am expecting that by Monday, we could see the market starting to move in anticipation of further monetary stimulus.