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Informist, Monday, Nov. 4, 2024

By Alina Geogy

MUMBAI – Investors will likely remain cautious ahead of the US presidential election Tuesday, which may lead to further fall in Indian equities, analysts said. With opinion polls pointing to a tight race between Donald Trump and Kamala Harris for the presidential role, analysts have raised concerns about challenges that victory of either candidate could pose for Indian companies. Developments in West Asia amid a rise in crude oil prices will also be in focus as global prices of the commodity could have an effect on several Indian companies.

A likely victory for Trump's Republican Party could lead to some gains in domestic stocks in the near-term, some analysts said, but some said his victory had been largely factored in, which would limit the gains. Likely curbs on the H1B visa programme could hamper information technology as an industry, and could lead to money moving out to private banking stocks from IT stocks, Kushal Gandhi, technical analyst at broking firm Stoxbox, said. Stricter visa rules and immigration policies are among Trump's proposals if he wins the elections. A cut in corporate taxes and tariff hikes on imports are some of the changes proposed by the Republican Party.

Market participants are also debating the US Federal Reserve's next move with respect to interest rates at its upcoming monetary policy meeting later this week, amid growing expectation that the Fed could cut rates again. Nearly all interest rate traders expect the Fed to slash key interest rates by 25 basis points, while there is some marginal expectation of even a 50-bps rate cut, according to the CME FedWatch Tool. The Federal Open Market Committee meeting is scheduled Wednesday and the interest rate decision is due Friday.

In order to gauge the next move for the Nifty 50, it is crucial to see if the index can surpass and stay above 24000 points, technical analysts said. Support for the 50-stock index is seen at 23400-23500 points. Monday, the Nifty 50 closed 1.3% lower at 23995.35 points and the BSE Sensex closed 1.2% lower at 78782.24 points.

Outflows by foreign institutional investors from the domestic equity market are also continuing this month, after record sales of shares worth around INR 1 trillion in October. Monday, FIIs sold shares worth over INR 43 billion on the exchanges, as per provisional data, while domestic investors net bought shares worth over INR 29 billion. Even though the benchmark indices are down around 8% from the record highs hit on Sept. 27, analysts said this fall could have been deeper had the domestic institutional investors not supported the market.

The quarterly earnings of Titan Co. and Dr. Reddy's Laboratories are expected Tuesday. Tata group-owned Titan Co. is expected to have benefitted from a revival in jewellery demand in the September quarter and is also expected to report healthy growth in its other business segments, including watches and wearables. Meanwhile, drugmaker Dr. Reddy's is expected to report a robust rise in revenue for the quarter but an on-year fall in net profit.  End

Edited by Ashish Shirke

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