The Indian stock market witnessed a sharp decline the day after the US election results showed a victory for Republican candidate and former President Donald Trump, while US markets surged in stark contrast.
At 2 pm IST, the benchmark BSE Sensex dropped by 794.73 points, or 0.99%, to 79,583.40. Meanwhile, the Nifty fell by 268.25 points, or 1.1%, to 24,215.80, compared to the previous day's close.
On the other hand, US stock markets experienced significant gains. On 7 November, the Nasdaq Composite Index rose by 544.30 points, or 2.95%, to $18,983.47.
The S&P 500 climbed 146.28 points, or 2.53%, to $5,929.04, while the Dow Jones Industrial Average surged by a record 1,508.05 points, or 3.57%, to $43,729.93.
The Russell 2000 also saw a substantial rise, increasing by 132.07 points, or 5.84%, to $2,392.92.
The previous day, on 6 November, the Indian stock markets had rallied. The Sensex closed at 80,378.13, up 901.50 points, or 1.13%, from the previous session, while the Nifty gained 270.75 points, or 1.12%, to 24,484.05.
Reasons for market movements
The decline in Indian stock markets can be attributed to several factors, including expectations that the US Federal Reserve might cut rates by 25 basis points, the rupee falling to a low of 84.3587 against the dollar, and foreign investors selling equities worth ₹4,445.59 crore, as reported by Moneycontrol.
The rise in US stock markets was driven by expectations of an era of deregulation and pro-business policies under Trump's leadership, according to CNN.
Sectors and companies impacted
Among the Nifty sectoral indices, Nifty Metal, Pharma, and Midsmall Healthcare saw the biggest declines, falling by 2.75%, 1.75%, and 1.32%, respectively. All sectors, except PSU banks, were in the red.
Among Sensex companies, Tech Mahindra experienced the most significant drop, falling 2.56%. Tata Motors, Sun Pharma, and IndusInd Bank also saw notable declines of 2.27%, 2.21%, and 2.19%, respectively.
Of the 30 Sensex companies, only SBI and TCS posted gains, rising by 0.40% and 0.22%, respectively.
Analysts cited two main reasons for the drop. Sunny Agrawal, an analyst at SBICaps Securities, described it as “more of a technical pullback, with some investors trying to use the rally in the previous session to book profits.”
Agrawal also pointed to deeper concerns over foreign inflows, noting that a rise in US Treasury yields, in anticipation of a tariff hike on imports by Trump, could lead to a stronger US dollar, which might hurt foreign inflows into India.
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