 |
|
The Indian stock market experienced a dip in early trading on Thursday, November 7, following a two-day surge fueled by the election victory of Donald Trump. The benchmark indices, Sensex and Nifty, witnessed a decline exceeding one percent, with investors adopting a cautious stance, likely due to the impending decision from the Federal Open Market Committee (FOMC). The FOMC meeting, scheduled for later that day, was expected to deliver a 25 basis point rate cut, and investors were keenly observing Chair Jerome Powell's remarks for insights into the future trajectory of interest rates.
The decline in the Indian markets was attributed to various factors, including the anticipation surrounding the FOMC meeting, the weakening Indian Rupee, and continued foreign fund outflows. The Rupee reached a record low on November 7, fueled by expectations that Trump's victory would strengthen the dollar in the months to come. This weakening Rupee, combined with relentless foreign institutional investor (FII) selloffs, further dampened investor sentiment. FIIs had already offloaded equities worth Rs 4,445.59 crore on Wednesday, following a record Rs 94,000 crore sold in October.
Another factor contributing to the market's weakness was the potential impact of Trump's policies on Indian IT companies. Although Trump's victory initially boosted IT stocks on November 6, concerns arose about potential protectionist measures under his presidency. These measures could pose risks to the earnings of Indian IT companies, heavily reliant on US clients for software exports. Shares of companies like Mphasis, LTIMindtree, and Tech Mahindra fell by up to 2.5 percent on November 7, reflecting this uncertainty.
While some analysts believe that Trump's anti-China stance could potentially benefit India, opening up new opportunities for trade and strategic collaboration, his criticism of India's high tariff rates and willingness to impose tariffs on Indian exports could negatively impact Indian businesses. The market awaits further clarity on Trump's policy details and their potential ramifications for the Indian economy.
Despite the downward trend in the Indian markets, the US markets experienced a significant surge following Trump's victory. Both the Dow and S&P 500 registered their biggest one-day percentage rise since November 2022, with the Nasdaq achieving its largest daily percentage gain since February. This contrasting performance highlights the complex global economic landscape and the uncertainty surrounding the potential impact of Trump's policies on various markets.
Source: Nifty, Sensex pull back after the Trump rally: Key factors behind the fall