The Nifty gained 1.1% or 270.75 points to close at 24,484.05 while the Sensex advanced 1.1% or 901.5 points to close at 80,378.13.
As global investors brace for economic and geopolitical tremors with the US at the epicentre, India is perceived as being among those economies that may benefit from Trump’s presidency, which is expected to see higher trade tariffs and lead to an exacerbation of US-China tensions.
“The overall sense in the market is that Trump’s policies offer India an advantage over other geographies,” said Pankaj Pandey, head of research, ICICI Securities. “While tariffs are Trump’s favoured tool, the tariff arbitrage is favourable for Indian auto, textiles and chemicals exporters.” Trump’s election manifesto indicated that the US could impose 10% duty on all imports and a 60% tariff on goods from China.
Elsewhere in Asia, China fell 0.1%, Hong Kong declined 2.23% and Indonesia dropped 1.44%. South Korea ended 0.52% lower while Taiwan gained 0.48%.
At home, the Nifty IT Index shot up 4% with Tata Consultancy Services (TCS) and Infosys surging over 4% each. HCL Technologies and Tech Mahindra jumped about 3.7% each.Pandey said a likely cut in US corporate tax could also spur spending, which will be good for IT companies, while introduction of the Biosecure Act will target adversary nations and be supportive of Indian drugmakers. The pharma index rose 1.1%.
AgenciesFPIs continue to sell
Foreign investors however continued to dump Indian stocks, pulling `4,446 crore out of equities on Wednesday.
“The outcome doesn’t promise any big foreign inflows but has offered relief to investors now that one of the big events is out of the way,” said Pandey.
“The Trump administration’s policies are expected to have a higher positive rub-off on India compared to the other regime.” So far in November, overseas investors have sold to the tune of Rs 16,826 crore after taking Rs 1.04 lakh out of India stocks in October. Domestic institutions continued buying, purchasing stocks worth Rs 4,889 crore on Wednesday. Investors will now watch for the outcome of the US Federal Reserve’s rate-setting meeting against the backdrop of the American presidential elections.
The central bank is expected to cut its key policy rate by 25 basis points but Fed chair Jerome Powell’s remarks thereafter will face greater scrutiny. “We can be certain that the Fed will maintain its easing cycle and we expect the overall environment to be conducive for fixed-income investments for portfolio diversification,” said Christy Tan, investment strategist at Franklin Templeton Institute.
“Our investment teams are expecting the 10-year yield to fall to 3.75% and Fed funds rate to fall to 3.6% by the end of 2025.” The Fed funds rate is at 4.75-5%. The 10-year Treasury yield jumped to 4.47% on expectations that Trump could resort to fiscal spending to boost the economy. At home, the Mid-cap 150 index advanced 2.09% and the Smallcap 250 index ended 1.88% higher on Wednesday. Out of the 4,063 shares traded on the BSE, 2,981 advanced, while 985 declined. Last month, the mid-cap index shed 1.90% while the small-cap index rose 0.03%.
“On a technical basis, the number of Nifty 500 companies trading below the 50-day moving average was down to 11%, which is a major low,” said Rohit Srivastava, founder of indiacharts.com.
“This also resulted in the upside witnessed in the market today.” Volatility Index declined 8.2% to 14.87 on Wednesday, signalling that traders see near-term risks to the market recede following the US election outcome. “Typically, October is a seasonally bearish month followed by a seasonally bullish November,” said Srivastava. “Nifty is expected to be between 25,040 and 25,350 by the end of December.”
