Nifty, Sensex end with solid gains as investors bake in Trump victory; focus on Fed meet outcome

All the sectoral indices ended in the green with the IT index up 4 percent, oil & gas, power, capital goods, realty up 2 percent each.

Bulls dominated Dalal Street on November 6 as investors baked in a potential second term for Republican Donald Trump. Both Nifty and Sensex surged over a percent.

At close, the Sensex was up 901.50 points or 1.13 percent at 80,378.13, and the Nifty rose 270.70 points or 1.12 percent to 24,484.00. Market breadth was in favour of gainer with approximately 2,852 stocks advancing, 964 declining, and 84 remaining unchanged.

"The global markets experienced a relief rally following the US election results, reducing political uncertainty with Trump securing a strong mandate. This has led to strong risk-on sentiments, driven by expectations of tax cuts and increased government spending," said Vinod Nair, Head of Research, Geojit Financial Services.

The domestic buying was broad-based, with IT leading the charge in anticipation of rebound in IT spending in the US. BFSI spending in the US has improved as per the IT Q2 result which is positive for Indian players, he added.

Despite the initial reaction to Donald Trump taking to the stage to declare victory and pledging to bring a “golden age" to the United States, analysts expect markets to remain volatile in the near term on the back of global factors with stock-specific action as index heavyweights announce quarterly results during the next few days.

Fundamental View

The attention will shift to the US Fed meeting outcome and the impact of Trump's protectionist policies on both the US and global economies. Markets have responded positively, with indices rising and the USD strengthening, largely due to Trump's previous term, which saw tax cuts and deregulation benefiting sectors like manufacturing, energy, and defense.

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However, Trump's protectionist stance—potentially imposing heavy tariffs on imports—could have wide-reaching effects, particularly on emerging markets that rely heavily on trade with the US. India, in particular, may face challenges from a stronger USD, leading to capital outflows and inflationary pressures, according to Ross Maxwell, Global Strategy Operations Lead, VT Markets.

Additionally, Trump's strict immigration policies could negatively affect India's tech industry, which depends on the free movement of skilled labor. "That said, Trump's first term fostered good relations with India, and his view of China as a security threat may lead to efforts to counterbalance China's influence in Asia, which could benefit India," Maxwell said.

Opportunities in defence, tech, and the expansion of Indian exports in sectors like pharmaceuticals and IT services may arise. In summary, while Trump's policies present both risks and opportunities, they are likely to create a cautious outlook for the global economy, he added.

Technical view

The Nifty has retested resistance at the 24,500 mark after two days of recovery, and sustaining this level could lead to a further rise toward 24,800, according to Ajit Mishra – SVP, Research, Religare Broking.

"While all sectors are showing strength, we expect banking and IT to be the primary drivers of the market going forward. Traders should consider aligning their positions accordingly, focusing on index majors and large midcap counters for long trades," he said.

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