India Stocks Outlook
Trump's win-led cheer seen brief as domestic cues weak
This story was originally published at 20:09 IST on 6 November 2024
Register to read our real-time news.Informist, Wednesday, Nov. 6, 2024
By Anjana Therese Antony
MUMBAI – Though the Indian market cheered the possibility of Republican candidate Donald Trump winning the US presidential poll, analysts do not expect the current optimism to continue in the near term, analysts said. "If at all Trump wins, the current optimism in our market may not last longer as our short-term fundamentals are not showing much positives," a research analyst at a domestic broking firm said. While the possibility of benchmark indices extending gains on Thursday for the third straight session is high, investors are expected to turn defensive within a couple of sessions.
Trump won 51% of the votes, while his opponent and Vice President of the US, Kamala Harris, got 47.5%, according to The Associated Press. A presidential candidate is required to win 270 electoral votes to win the election and Trump won 277. Global leaders, including Prime Minister Narendra Modi, congratulated Trump on his victory. "As you build on the successes of your previous term, I look forward to renewing our collaboration to further strengthen the India-US Comprehensive Global and Strategic Partnership," Modi posted on social media platform X, formerly Twitter.
US indices such as the Dow Jones Industrial Average and Nasdaq Composite grew more during Trump's presidency during 2017-2021 than Joe Biden's since 2021. During Trump's term, Dow Jones grew nearly 60% and Nasdaq rose over 140%, while those during Biden increased nearly 40% and 37%, respectively.
Gains in the domestic market could be limited in the near term and returns from stocks will be lower than what they were in the last few years due to recurring selling by foreign investors, slowdown in corporate earnings growth, expensive valuations, geopolitical uncertainty in West Asia, and downgrades in earnings estimates for the current and next financial years for some large-cap and mid-cap companies.
The market should correct 10-20% more for valuations to reach comfortable levels, the analyst said. Benchmark indices Nifty 50 and Sensex declined around 6% each during October. However, they have gained 1% so far in November. On Wednesday, the Nifty 50 and Sensex ended 1.1% higher each at 24484.05 points and 80378.13 points, respectively. The near-term support for the 50-stock index is pegged at 24300-24250 points and resistance at 24500-24600 points, according to technical and derivatives analysts at different broking firms.
On the earnings front, large-cap companies such as Mahindra & Mahindra and Trent are scheduled to release their results Thursday. Among other companies posting their results Thursday are Astral, Cummins India, Escorts Kubota, Indian Hotels, and Lupin.
The monetary policy meeting of the US Federal Reserve will grab global investors' focus, the outcome of which is due early Friday. Trump's return to the White House could refocus the Federal Reserve on fighting inflation, pointing the central bank in a more hawkish direction, Dow Jones reported Wednesday. Trump's immigration and tariff proposals, in particular, may lift inflation and create potential supply or demand shocks, the report said.
Among other events under focus will be MSCI's quarterly rejig of the global standard index due Thursday. Nuvama Alternative & Quantitative Research expects the weightage of HDFC Bank to be increased during the rejig, which could lead to an inflow of $1.88 billion. It also expects the inclusion of Adani Energy Solutions, Kalyan Jewellers India, Oberoi Realty, Alkem Laboratories, and BSE. End
US$1 = INR 84.28
Edited by Tanima Banerjee
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