Trump-Putin Alaska Meet: Ajay Bagga Weighs In On How Every Scenario Will Play Out At The Markets

Geoeconomics to the fore this Friday. 

Market reactions to Alaska outcomes will depend on the outcome:

1. Ceasefire and agreement to a tripartite meeting with Ukraine, Russia and US. (Positive sentiment.)

2. No ceasefire, but agree to keep talking. (Disappointment but hope.)

3. Ceasefire and land swap, grand agreement, Ukraine betrayed once again. (EU in turmoil, thinking "Who next?", Estonia, Lithuania, Latvia in panic mode, Poland ups rearmament, EU significantly increases defence expenditure.)

4. No deal, end talks with promise to "keep meeting, keep talking". ( Disappointment, Russia ups attacks)

5. No deal, bitter end to talks with more sanctions rhetoric. ( Deep disappointment)

There are multiple post-Alaska market reactions/ outcomes, to whichever of these 5 outcomes fructifies.

Hence, markets will tread water and hold their horses now, as this is one of the biggest market-moving events of this year, at least.
Edge of your seat watching ahead!


Indian markets have the Independence Day holiday on Friday, so expect positions to be trimmed going into the long weekend. India has much to gain from a Truce at Alaska, as the raison d'être for secondary tariffs on India will weaken.

Relief rally possible next week if there is a positive outcome in Alaska. However, geoeconomics is more noise than signal, so we expect the rally to be short-lived. Indian economic growth and corporate earnings will determine the market direction, and those are more soft than encouraging for now. The RBI missed a runway to stimulate by more rate cuts at its August meeting despite inflation falling sharply. 

There are no stagflationary threats to India; we will grow around 10% in nominal GDP terms, but the corporate earnings slow down, and the challenges that the SMIDs are facing could postpone a market recovery. When markets from Japan, Australia, Germany to the US are hitting all-time highs, Indian markets have delivered a dismal -1% over the trailing 12 months . The setup is good for a recovery ahead, but the economy and earnings need to show spunk. Once the markets, which are forward-looking discounting mechanisms, once the markets sense this, they expect a strong rally. For now, we tread water, and celebrate our much-cherished Independence Day while keeping an eye on Alaska.

1. Ceasefire with Tripartite Meeting (Ukraine–Russia–US)
Global: Strong positive
US / Europe / Asia (ex-India) / India: All positive
Impact: Broad relief rally, stability in commodities.

2. No Ceasefire, But Dialogue Continues
Global: Mildly positive
All regions: Mildly positive
Impact: Sideways drift with cautious optimism.

3. Ceasefire with Land Swap (Pro-Russia Tilt)
Global: Volatile to negative
US: Mixed; Europe: Negative; Asia (ex-India): Mildly positive; India: Mixed
Impact: Fears of EU instability, commodity volatility.

4. No Deal, But Agreement to Keep Meeting
Global: Mildly negative
All regions: Mildly negative
Impact: Mild disappointment; markets tread water.

5. No Deal, Bitter End with Sanctions
Global: Strong negative
All regions: Negative
Impact: Sharp risk-off mood, safe-haven surge, and emerging market outflows.

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