Indian stock markets rallied strongly on Wednesday, November 6, fueled by early projections of former President Donald Trump leading in the US presidential election. The benchmark indices Sensex and Nifty 50 surged over 1% each, with the Sensex rising by 902 points to close at 80,378 and the Nifty 50 gaining 277 points to settle at 24,484. This marked the second consecutive session of gains as optimistic market sentiment swelled following reports of Trump’s advantage, particularly benefiting export-oriented sectors like IT.

By the end of the session, the broader BSE Midcap and Smallcap indices rose by 2.28% and 1.96%, respectively. Additionally, the overall market capitalization of BSE-listed companies increased to nearly Rs 453 lakh crore from Rs 445 lakh crore the previous day, yielding investors a staggering Rs 8 lakh crore in a single trading day.

On a day that saw a broad market rally, all sectoral indices ended in positive territory. Leading the charge was the Nifty IT index, which soared 4%, benefiting from a strengthening US Dollar and a weaker Indian Rupee. The real estate and oil & gas sectors also performed well, with both the Nifty Realty and Nifty Oil & Gas indices climbing nearly 3% each. Consumer Durables recorded a solid 2% gain, while other sectors, including Auto, Media, Metal, Pharma, and PSU Banks, saw advances of over 1% each.

The rally in IT stocks was particularly noteworthy, as a strong dollar makes earnings from US clients more valuable for Indian tech companies. Stocks within the Nifty IT index, such as TCS, Infosys, and Wipro, showed significant upswings, drawing investor attention to the export-driven sector.

Trump’s Projected Lead Lifts Market Spirits

Investor sentiment in India mirrored the optimism on Wall Street as Trump’s projected success in the US presidential election emerged as a key factor in the day’s rally. Early voting trends from the US indicated Trump leading with 266 electoral votes and holding a strong position across 27 states, according to AFP, which cited US media sources.

Analysts noted that a Trump-led Republican administration could impact global trade dynamics, potentially increasing tariffs and favouring protectionist trade policies. For India, a more protectionist US approach could reduce competition for domestic firms in the US market, potentially benefitting sectors like IT, pharmaceuticals, and textiles that rely on US exports.

The market also witnessed strong performances from individual stocks, driven by both macroeconomic factors and company-specific news. Notable gainers included GAIL, which surged over 6%, and Granules India, which gained more than 4% despite posting quarterly results that fell below expectations. In contrast, Hindustan Zinc tumbled by more than 8% as the government opened an Offer for Sale (OFS) for non-retail investors.

Meanwhile, Titan emerged as one of the top losers on the Nifty, falling nearly 2% despite the strong market. The drop came in response to weaker-than-expected Q2 earnings.

In addition to the rally in IT and realty stocks, oil marketing companies (OMCs) and paint manufacturers saw gains as Brent crude prices dropped over 1% following the US election trends. A potential Trump administration is expected to maintain a favourable stance on oil production, which would likely keep energy prices moderate. Lower crude oil prices are advantageous for Indian OMCs and paint companies, as it reduces raw material costs and improves margins.

Market breadth was firmly positive, with the advance-decline ratio at an impressive 4:1, indicating that gainers significantly outnumbered losers. The strong market breadth and advancing stocks suggest robust investor confidence, buoyed by the possibility of a favourable US political climate under Trump’s leadership.

The midcap segment continued its rally, with the BSE Midcap index jumping 1,240 points to reach 57,356. Banking stocks also remained resilient, with the Nifty Bank rising 110 points to close at 52,317.

Story first published: Wednesday, November 6, 2024, 16:10 [IST]