The Shanghai Composite Index pulled back after China published mixed economic numbers on Friday. The index, which tracks some of the top companies in the country, was trading at CNY 3,367, down by 8.32% from its highest level this year.

China retail sales and industrial production data

The Shanghai Composite Index retreated after data by the National Bureau of Statistics (NBS) showed that China’s retail sales boomed in October. Sales rose by 4.8% in October, higher than the median estimate of 3.8% and the previous quarter’s 3.2%.

They rose from 3.35% in September to 3.51%, a notable thing since consumer spending is one of the biggest parts of the Chinese economy.

Another positive was that China’s unemployment rate dropped from 5.1% in September to 5.0% in October. It has remained in this range in the past few months. 

On the negative side, China’s industrial production dropped from 5.4% in September to 5.3% in October, missing the analysts’ estimate of 5.5%. Fixed asset investments also remained unchanged at 3.4%, missing the expected 3.5%.

These numbers mean that the economy is doing relatively well although it will struggle to hit the 5% target.

As a result, the Chinese government is working to stimulate the economy. Earlier this week, the government unveiled a $1.4 trillion stimulus package. Most of these funds will go to support cash-strapped states, which have struggled after the real estate industry crumbled.

The program will go on through 2028. A key criticism of the package is that it does not go directly to areas that will stimulate retail spending. One of the stimulus measures that targets consumers is taxes by the PBoC, which have remained low this year

China prepares for tariffs

The Shanghai Composite Index reacted to the upcoming tariffs from the United States. Donald Trump has pledged to impose more tariffs on Chinese goods as he works to reduce the trade deficit. He also hopes that these tariffs will help to pay for his tax cuts. 

China will also respond to these tariffs as it did last time. In this, it will likely target key American sectors like agriculture that are highly sensitive to US politics. 

Therefore, the Shanghai Composite and other indices like Hang Seng and China A50 are reacting to the threat of a trade war between the two countries. 

Most companies in the Shanghai Composite were little changed on Friday. Some of the most notable movers were firms like Shanghai Jiao Yun whose stock jumped by over 10% after the auto parts company published strong results. 

The other top performers were companies like Grinm Materials, Solareast Holdings, Daqian Ecology, and Shanghai Material Trading, which all jumped by over 10%. 

Read more: UBS cuts forecast for China stocks amid potential US tariffs and weak stimulus

Shanghai Composite analysis

The daily chart peaked at CNY 3,676 as investors focused on China’s stimulus package. At its peak, the index was up by over 36% from its lowest level in October. 

Recently, however, it has pulled back and was trading at CNY 3,367. It has remained above the 50-day and 200-day Exponential Moving Averages (EMA), which is a bullish sign. 

Meanwhile, the Relative Strength Index (RSI) and the MACD indicators have all pointed downwards. The RSI has dropped below the overbought level of 70, while the two lines of the MACD have formed a bearish crossover.

Therefore, the Shanghai Composite index will likely resume the uptrend in the near term. If this happens, the next point to watch will be the resistance point at CNY 3,511m, its highest level on November 8. A break above that level will point to more gains as bulls target the key resistance level at CNY 3,676. 

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Tata Consumer Products share price has suffered a harsh reversal as it moved into a deep bear market. After soaring to ₹1,248 in July this year, the stock has dived to ₹922, its lowest level since December last year. 

The sell-off coincided with the sharp reversal of other Tata Group of Companies companies. Tata Steel stock has dived to ₹137.9, its lowest level since March 2024. Similarly, Tata Consultancy Services has moved into a correction, falling by 10% from its highest level this year.

Other companies, such as Titan, Tata Power, and Tata Chemicals, have all fallen by over 10% from their highest levels this year.

Tata Consumer Products share price has crashed

TCP is one of the biggest fast-moving consumer goods (FMCG) companies in India. It focuses on key consumer products like tea, coffee, liquid beverages, and foods.

The company has a leading market share in all these industries. For example, it has continued to take share in tea as one in three households in India start their mornings with a cup of Tata Tea, which is the second-biggest tea brand in the country. Tetley has become the third-biggest tea brand in the UK and the biggest one in Canada.

It also owns some of the top brands in the coffee industry like Eight O’Clock, Tata Coffee Gold, and Tata Coffee Cold Coffee. Other top brands in its portfolio are products like Tata Salt, Tata Starbucks, and Tata Copper+.  Eight O’Clock is the 4th biggest coffee brand in the US.

Tata Consumer Products has historically done well as the middle-class expansion continued in the past few years. As a result, its annual revenue has continued growing, helped by higher volumes and prices. 

The stock has underperformed the market even after it published strong financial results. Its consolidated revenue growth was 13%, with India Beverages growing by 3%. India Foods and its international business had a 28% and 7% growth rate. 

The numbers showed that India’s beverages segment generated ₹1,380 crore in revenue, while Indian Foods, International, and non-branded jumped by 28%, 7%, and 19%. 

For the H1’FY25, its India beverages revenue was ₹2,903 Cr, while the other three grew by 29%, 9%, and 26%, respectively. These numbers showed that the company was doing well as demand for packaged goods rose. 

However, there are concerns about growth and costs in India and other markets. These concerns have helped to push most FMCG companies sharply lower. For example, Unilever’s shares have dropped by 12% from the year-to-date high. Hindustan Unilever shares have moved into a bear market after falling by 20% from the year-to-date high.

In the long term, however, the Tata Consumer Products share price may bounce back because it is often seen as one of the country’s top-value brands.

Tata Consumer Products share price analysis

Tata Consumer Products chart by TradingView

The daily chart shows that Tata Consumer Products stock price has dived amid weak technicals. It formed a double-top pattern at ₹1,247. In most periods, this is one of the most bearish patterns in the market. 

The stock has also dived below the neckline at ₹1,016, its lowest swing on June 4. It has also formed a death cross pattern as the 200-day and 50-day moving averages have made a bearish crossover. In most periods, this is one of the most bearish signs in the market.

Tata Consumer Products has also dropped below the bottom of the trading range of the Murrey Math Lines tool. The Relative Strength Index (RSI) and the Stochastic Oscillator have continued falling.

Therefore, the stock will likely continue falling as sellers target the key support level at ₹800. On the flip side, a move above the key resistance level at ₹1,016 will point to more gains in the near term.

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The Nifty 50 index moved into a correction after falling by over 10% from its highest level this year. It slumped to a low of ₹23,500, its lowest level since June 25 as the sell-off gained momentum. 

Top Nifty 50 index companies slump

The main catalyst for the Nifty 50 index crash has been the ongoing sell-off by some of its biggest constituents after earnings. 

The biggest mover has been Asian Paints, whose stock has moved into a deep bear market after falling by 26% from its highest level this year. 

Its sell-off accelerated after the company published weak financial results last week. Its revenue and profits continued falling during the quarter as the domestic decorative coatings volume and margins slumped hard. The company warned about the ongoing subdued demand in the country.

The other top laggard in the Nifty 50 index was Bajaj Auto whose stock plunged to ₹9,500, its lowest level since August 6. Like Asian Paints, the stock has moved into a bear market as it fell by over 255 from its highest level this year. 

IndusInd Bank is another top laggard in the index as its stock imploded to the lowest level since April 2023. It has fallen by almost 40% from the year-to-date high, making it the worst-performing bank stocks in the country. 

Trent, which has been one of the best-performing companies in India, has also suffered a harsh reversal. After peaking at ₹8,325 in October, the retailer has plunged by 22.3% and is hovering at the lowest swing on August 12. 

Companies in the Tata Group Holdings are also not doing well. After being one of the best-performing Nifty 50 index stocks this year, Tata Motor share price has dropped in the past seven consecutive days, falling to its lowest level since January. It has plunged by over 34% from the year-to-date high.

Tata Consumer Products shares have collapsed to ₹925, the lowest level since December 13. It has dropped by 25%, after it formed a double-top pattern at ₹1,243. 

Many other Nifty 50 constituent companies have suffered a harsh reversal in the past few weeks. Other notable laggards were companies like Tata Steel, NTPC, Hindalco Industries, Hero MotoCorp, and Hindustan Unilever.

On the other hand, some of the most notable gainers in the last 30 days are companies like Wipro, Tech Mahindra, ICICI Bank, and Eicher Motors. 

Read more: Tata Steel share price is beating rivals; remains in a correction

India could benefit from China-US tensions

The main reason why the Nifty 50 index has plummeted is the recent Trump election in the US, which analysts estimate will lead to volatility in the coming months. Trump has threatened major tariffs, especially on Chinese goods and has appointed Marco Rubio, a hawk, to become the Secretary of the State.

India could become a big beneficiary of these tensions because it has a cordial relationship with the United States. It could see more companies move to the country to bypass America’s tensions and sanctions. 

The Nifty 50 index has also plunged as many retail investors who bought stocks started to unwind their trades. Most importantly, the Reserve Bank of India (RBI) has resisted cutting interest rates, a move that most central banks have done.

Nifty 50 index analysis

Nifty 50 chart by TradingView

The Nifty 50 index has crashed hard in the past few weeks. It has dropped from a high of ₹26,267 in September to ₹23,532, its lowest level since June 25. It has dropped below the 50-day and 25-day Exponential Moving Averages (EMA).

The Nifty 50 index has moved to the ultimate support at ₹23,437. At the same time, the MACD indicator has moved below the zero line, while the Relative Strength Index (RSI) has moved to the oversold level. Therefore, the index will likely continue falling as sellers target the extreme oversold level at ₹22,656. 

The bearish view will become invalid if the stock rises above the strong pivot reverse point at ₹24,218. 

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The CAC 40 index has moved into a technical correction after crashing by over 11% from its highest level this year. It has retreated to €7,200, down by 11.50% from the year-to-date high of €8,260. It is also hovering near its lowest level since August 12. 

CAC, which tracks the biggest companies in France, has underperformed its global peers as the Nasdaq 100, S&P 500, and Dow Jones have surged to their record highs.

China’s exposure to blame

The most important reason why the CAC 40 index has underperformed its American peers because of its exposure to China.

Indeed, the top laggards in the index are those with a substantial presence in the second-biggest economy globally. 

LVMH, the biggest luxury brand company in the world, has dropped by over 34% from its highest level this year as demand from Chinese shoppers wanes. It has moved to its lowest level since October 2022. 

Kering, the parent company of Gucci, has been the second-worst-performing luxury brand this year after Burberry. Its stock has dropped to €220, a 70% drop from the highest level in 2021. It is hovering near its lowest level since 2017 after reporting weak sales and delivering several profit warnings.

Kering’s revenue dropped by 15% in the third quarter to €3.7 billion, with Gucci’s sales falling by 26% to €1.64 billion.

L’Oreal, one of the top sellers of beauty products, has also been in a deep sell-off because of its exposure to the Chinese market. Its stock is down by 27% this year, a trend that could continue after it reported weak financial results. The most recent results showed that L’Oreal’s revenues jumped by 6% to €32.4 billion as its Chinese business slowed.

Pernod Ricard, another top French giant, has plunged by over 30% this year as sales of its popular brands dropped. 

The other top laggards in the index are STMicroelectronics, Vinci, Dassault Systemes, and Eurofins Scientific, which have all crashed by over 20%.

On the other top gainers in the CAC 40 index are companies are firms like Schneider Electric, Saint Gobain, EssilorLuxottica, AXA, and Danone have all jumped by over 15% this year.

European Central Bank and Fed decisions

The CAC 40 index has underperformed as concerns about Donald Trump’s tariffs continued. He has promised to implement tariffs on most imports, including friendly nations like France and those in the European Union.

The trade volume between the two countries has risen by 32% to over $153.8 billion. Tariffs would have an impact on the trade relations between the two countries and hit top companies. 

Meanwhile, the Federal Reserve and the European Central Bank have continued to slash interest rates in the past few months. The Fed and the ECB have slashed rates by 0.75% and they will continue doing that in the coming months.

CAC 40 index analysis

CAC 40 chart by TradingView

The CAC 40 index has been in a strong downward trend in the past few months after peaking at €8,263, where it formed a double-top pattern. It dropped to a low of €7,310, its lowest level since August 14.

The index has remained below the 50-day and 200-day Exponential Moving Averages (EMA). Similarly, the Relative Strength Index (RSI) and the MACD indicators have all pointed downwards, pointing to more selling pressure.

Therefore, the index will likely continue falling as sellers target the psychological level at €7,000, its lowest level on August 5.  This view will become invalid if the index rises above the key resistance at €7,792.

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The DAX index has remained on edge this month as investors assess the recent Donald Trump election victory and the recent actions by the European Central Bank (ECB) and the Federal Reserve. The blue-chip index, which tracks the 40 biggest companies in Germany, was trading at €19,263, down from the year-to-date high of €19,662.

Trump election and tariff risks

The DAX index has moved sideways after Donald Trump’s victory, which could become a big challenge for German companies.

In his campaign, he promised to deliver substantial tariffs on goods imported from European countries like Germany, France, and Germany. Such tariffs will lead to retaliation from these countries, triggering a lengthy trade war.

Germany and the US have a close trading relationship. Data shows that the US exports goods worth over $70.9 billion to Germany, while the latter sold goods valued at over $153 billion. Some of the top German companies exporting to the US are Volkswagen, BMW, and Airbus. 

Still, there are chances that these companies will do well despite of tariffs. Besides, many of them have established substantial locations in the United States. For example, BMW employs over 11,000 employees in the US, while Volkswagen has 10,000.

Federal Reserve and European Central Bank

The DAX index has also reacted to the recent actions by the Federal Reserve and the European Central Banks (ECB).

In the US, the Federal Reserve has embarked on a gradual easing pace, cutting rates by 0.25% in the last meeting. It has now slashed rates by 0.75%, and officials point to more cuts going forward since inflation is on a path towards 2% and the labor market is deteriorating. Economists expect at least four rate cuts between now and December next year. 

The European Central Bank has been more dovish because of the deteriorating economy. Germany has remained in a recession, making it the worst-performing major economy this year. Worse, there are signs that the coalition government will collapse in the coming months.

The DAX index does well when the Fed and the ECB are slashing interest rates. Lower rates have historically been good news for stocks since investors move to them from government bonds. 

German automobiles in trouble

A closer look at the top DAX index constituents shows that automakers have been the worst performers this year. 

BMW shares have crashed by over 32% this year, while Porsche, Volkswagen, and Mercedes-Benz have plunged by 24%, 25%, and 16%, respectively.

These companies have plunged as the automobile industry slows, their electric vehicle brands implode, and as competition from Chinese brands intensifies. Most of them have a presence in China, a country whose growth has been slowing.

Other top laggards in the DAX index this year are companies like Bayer, Continental, Deutsche Post, Infineon, Brenntag, Sartorius, and RWE.

On the other hand, the DAX index has had some winners in the past few months. Siemens Energy, which nearly collapsed last year, has surged by 285% in 2024, making it the best-performing company in the index. 

Zalando shares have soared by 27%, while Rheinmetall, SAP, and Munich Re have soared by over 97%, 58%, and 25%, respectively. Other notable gainers were Deutsche Telekom, Commerzbank, and Deutsche Bank. 

DAX index analysis

The weekly chart shows that the DAX index has been in a bullish trend in the past few years. Recently, however, it has pulled back in the last four consecutive weeks. It has also rising wedge pattern, a popular bearish sign in the market.

The Relative Strength Index (RSI) and the MACD indicators have formed a bearish divergence chart pattern. Therefore, the stock will likely have a bearish breakout in the coming months as the uptrend fades. If this happens, it could retreat to the 100-week moving average level of €17,100

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