Benchmark stock market indices rallied on Wednesday after an initial bout of volatility triggered by uncertainty over the US elections. While what began as a photo finish between Republican Donald Trump and Democrat Kamala Harris seems to have tilted in favour of the former president, the declaration of victory appears to have boosted market sentiment on Dalal Street.
The S&P BSE Sensex surged by 1,055.31 points at 80,531.94 till 2:28 pm; and the NSE Nifty50 rose by 311.95 points trading at 24,525.25.
Cutting down the volatility in the clearer outcome of the election, broad markets also gained.
US Elections, Trump’s Victory, and IT Stocks
The rally has seen the biggest gainer in IT stocks with 4% gain by Nifty IT index. TCS, HCLTech, Infosys, Tech Mahindra, and Wipro were among the top gainers. Analysts were of the view that if Republicans win, then temporarily US equities are bound to benefit, which was to bode well for the Indian IT stocks.
The equity strategy team at Emkay Global said, “A Red Sweep will certainly trigger a short-term rally, but its sustainability is going to depend upon how the earnings momentum pans out and valuations that have remained weak.”
Trump’s victory may even lift the major US stocks, including Tesla, which may lead to a broader market rally.
Equirus economist Anitha Rangan said, “Trump’s victory could result in increased spending in the US, keeping inflation somewhat elevated. It would also strengthen the dollar, but could lead to more trade barriers.”
“However, more important than the winner is a clear result, which would provide relief to markets that have been volatile in anticipation of the outcome. This could be positive for India due to its strong trade relations with the US,” she added.
Rangan further explains, “In the medium to long term, positive results should come from the good relationship India has with both the US and Trump. India can handle currency adjustments using its vast reserves.”
She added a caveat: “The US rate-cutting cycle may be slower than expected, which could lead to a shallower rate-cutting cycle for India. However, India’s rate hikes have been half of what the US raised, leaving India with ample room in the interest rate space while maintaining resilient growth.”
