Moneycontrol Bureau
Mounting uncertainty over US presidential elections of 2016, scheduled for November 8, has rattled Indian and global markets alike last week. Foreign investors, too, started cutting exposure to emerging markets, including India. That resulted in more than 2 percent fall in the Sensex and Nifty in the week gone by. The S&P 500 continued to lose for the ninth consecutive day on Friday, the longest losing streak for the index in more than 35 years.
Earlier investors were confident of a Hillary Clinton victory but soon an FBI investigation on her the deleted mails cast a shadow ove the Democrat candidate's odds.
The latest opinion poll indicated that the gap between the two candidates - Donald Trump and Hillary Clinton - has narrowed.
Hence, the volatility is expected to remain till the outcome of US election, feel experts. According to them, if Donald Trump wins the election, then there can be further sell-off that would be a big opportunity for investors (who missed an earlier rally) to pick quality stocks, but if Clinton wins, then there could be a relief rally.
A Republican government could prove negative for emerging markets (EMs) as they could turn out to be a close parallel to Reaganomics, which means a larger focus on fiscal spend on infrastructure, believes Manishi Raychaudhuri of BNP Paribas. This could also lead to appreciation in the US dollar.
Shane Oliver of AMP Capital Advisors warned of a downside risk to markets if Trump becomes US President.
Trump's economic policies will go down badly with investors, Oliver said, adding that a Trump victory may lead to a global trade war. He advised investors that once the elections are out of the way, the market may offer a good buying opportunity for investors.
While it is good that markets have corrected in the run-up to the US elections, worries continue for countries with larger current account deficit as currency turmoil can cause volatility. “India would be relatively safe and will still in a position to outperform,” Raychaudhuri said.
On the coming Monday, global markets will react to US non-farm payroll data for October that was lower-than-expected at 161,000.
Back to domestic cues, the market will also focus on quarterly earnings. So far companies have shown some improvement in the September quarter, but the major recovery is likely from the next calendar year, feel experts.
Important results next week:November 7 - ICICI Bank, Shree Cements;November 8 - BHEL, Ashok Leyland, Bharat Forge, InterGlobe AviationNovember 9 - Lupin, Cipla, Bosch and also PSU firms like Indian Bank, J&K Bank, Karnataka Bank, Punjab & Sind Bank, UCO Bank, Power Grid, RECNovember 10 - Sun Pharma, PFC, Thermax, WockhardtNovember 11 - SBI, Tata Steel, BPCL, M&M, Bank of BarodaNovember 12 - Hindalco, PTC India
On macro front, the government will announce industrial output data for September after market hours on Friday, i.e. November 11.Punjab National Bank subsidiary PNB Housing Finance and PepsiCo India's largest franchise bottling partner Varun Beverages will also debut on the stock market on November 7 and November 8, respectively.
In corporate action, there will be stock split - Inani Marbles & Industries from Rs 10 to Rs 2 (November 10) and Indo Count Industries from Rs 10 to Rs 2 (November 11).
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