India and China have decided to look beyond their long-standing border tensions and work together to enhance trade relations. Both the countries reaffirmed that they are partners in development.
Both PM Narendra Modi and Chinese President Xi Jinping agreed to revive bilateral trade and diplomatic ties during their discussions as Modi’s visit to China comes after a gap of seven years. He arrived in Tianjin to attend the Shanghai Cooperation Organisation (SCO) summit which saw the participation of Russian President Vladimir Putin and leaders from Central Asian countries such as Uzbekistan and Kyrgyzstan, along with Pakistan and Iran.
Significantly, the SCO summit was held at a time when U.S. President Donald Trump has adopted a tough stance on India, China, and Russia. The event provided a platform for multiple high-level engagements, including meetings between Modi and Xi, Modi and Putin, and Xi and Putin. Reports indicate that the U.S. and Trump are concerned about the strengthening cooperation among these countries.
The New York Times and other outlets reported that Trump’s policies have angered India, which has been considered one of America’s closest allies. The report noted that Modi’s refusal to support Trump’s claims, such as taking credit for ending the India-Pakistan conflict instead of Russian oil diplomacy, and India’s unwillingness to back Trump’s Nobel Peace Prize ambitions led to the imposition of a steep 50 per cent tariff on Indian goods.
Europe Plans Security Force for Ukraine
The European Commission President, Ursula von der Leyen, announced that a joint European force, with U.S. support, will soon be deployed in Ukraine to bolster its security. A final decision on this plan is expected at a meeting in Paris in the coming days.
For now, the mission’s goal is not to engage in war with Russia but to ensure a ceasefire between Russia and Ukraine and prevent future attacks. The force will also play a role in Ukraine’s post-war reconstruction. However, analysts believe that Russian President Vladimir Putin is unlikely to accept the presence of a European force backed by the U.S. on Ukrainian soil.
Meanwhile, all eyes are on the scheduled meeting between Modi and Putin, which is expected to be a key highlight of the summit. This meeting takes place against the backdrop of Washington’s increasing pressure on New Delhi over its significant imports of Russian oil. Observers are keen to see whether Modi’s diplomatic efforts can help bring an end to the ongoing Ukraine-Russia conflict.
Interactions in Tianjin continue! Exchanging perspectives with President Putin and President Xi during the SCO Summit. pic.twitter.com/K1eKVoHCvv
— Narendra Modi (@narendramodi) September 1, 2025
Indian Markets Poised for a Rebound
After suffering steep losses last week due to Trump’s tariff shock, Indian stock markets are showing signs of recovery. The Sensex fell by 1,497 points (-1.84 per cent), while the Nifty dropped 443 points (-1.78 per cent) in the previous week. Midcap and Smallcap indices saw even sharper declines of 3 per cent to 3.9 per cent. Except for FMCG, all major sectors faced heavy selling, leading to a significant erosion in market value.
However, there are several reasons to believe that the Indian markets could bounce back this week:
- Strong GDP Growth: India’s GDP grew by 7.8 per cent in the June quarter, exceeding forecasts, including those of the Reserve Bank of India.
- GST Council Meeting: The much-anticipated GST Council meeting is scheduled for September 3–4. Expectations are high following Prime Minister Modi’s Independence Day reference to a ‘Diwali gift.’ Speculation suggests that the removal of 12 per cent and 28 per cent tax slabs under GST could benefit both consumers and businesses.
- U.S. Court Ruling on Tariffs: A US appeals court has ruled that most of the tariffs announced by President Trump, including those targeting India, were illegal and an abuse of power. While the tariffs remain in place temporarily, the court has allowed time for an appeal. If the US Supreme Court upholds this ruling, tariff rates could fall to 15 per cent, representing a major boost for India and a setback for Trump.
- U.S. Jobs Data: The latest US unemployment data, set to be released this week, could influence the Federal Reserve’s interest rate policy, which in turn impacts global capital flows.
This morning, the Gift Nifty rose by more than 60 points, signaling a likely recovery for the Sensex and Nifty. In contrast, U.S. markets closed mostly lower due to challenges faced by chipmaker Nvidia following China’s trade restrictions. Asian markets showed mixed trends that Chinese and Hong Kong indices gained up to 2 per cent, while Japan’s Nikkei fell by 2 per cent. China’s factory activity growth index for August also showed improvement. Additionally, India’s August vehicle sales figures, which will be announced shortly, along with last month’s GST revenue data, will provide further cues for investors.
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