More Stories

Informist, Thursday, Nov. 7, 2024

By Anjana Therese Antony

MUMBAI – With the US presidential election behind them, the interest rate decisions of the Bank of England and the US Federal Reserve, both due Thursday, will now be eyed by investors globally, including India, and will provide cues for Friday. The US Fed is widely expected to trim interest rates by 25 basis points and investors will closely watch for the apex bank's comments on future interest rate decisions.

The Fed fund futures price in a 97.4% probability of the US Fed cutting its benchmark rates by a quarter percentage point to 4.50-4.75%. Interestingly, a few market participants expect a 50-bps cut in US rates a day after Donald Trump won the presidential election, with Fed fund futures showing a 2.6% possibility for the same compared to a 0% chance anticipated a month ago. 

"Trump's win may bring certain challenges, particularly related to immigration policies, chances of foreign exchange volatility, among others," a research analyst at a domestic broking firm said. While the Indian market cheered Trump's win in the presidential election, pushing equities sharply higher Wednesday, it erased all gains Thursday due to rising US Treasury yields, concerns about the bearish stance of foreign investors, expensive valuations, and the slowdown in earnings growth of Indian companies. 

Experts said there could be more foreign outflows from India to the US and other emerging markets such as China in the near term. With Trump expected to put a thrust on reduction in corporate taxes, it is expected that this measure could boost US companies' financial performance. Foreign investors net sold equities worth nearly $10 billion in October, the highest monthly foreign outflow the country has seen from its stock market in at least 24 years. So far in 2024, foreign institutional investors net purchased only $353.46 million worth of shares in India. This is only 1.5% of the $24.07 billion inflow in 2023. They are also increasingly adding their short positions in index futures, which has weighed on the sentiment.

"Trump 2.0 will see further fiscal thrust coming predominantly by full extension of the 2017 tax cuts (expiring end-2025), with spending focus on infra, tech, and defence," Emkay Global Financial Services said in its report. A broad extension of tax cuts was estimated to increase the cumulative deficit by $4.6 trillion over a decade, with Trump-led policies being more extravagant at over $7.5 trillion, the report said.

Benchmark indices fell over 6% in October, the biggest monthly fall since March 2020 after the COVID-19 pandemic hit the country. Headline indices, which closed over 1% higher Wednesday, fell at the same pace Thursday. The Nifty 50 ended 1.2% lower at 24199.35 points and the Sensex closed 1% lower at 79541.79 points. The 24000 level is a crucial support for the index, and resistance is seen at 24250-24400 points, a senior technical and derivatives analyst at a domestic broking firm said.

Analysts said valuations are expensive in almost all sectors, except a few banks. Though there are concerns about a widening gap between credit and deposits of banks, analysts said things are getting better compared to a few quarters ago. On Thursday, most sectoral indices ended lower.

With respect to initial public offerings, the public issue of food delivery company Swiggy closes Friday. As of 1657 IST, only 35% of the shares allocated were subscribed. The company got bids for 55.69 million shares compared to the 160.11 million shares on offer.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.