Indian stocks post longest winning streak in nearly 5 months on FPI inflow hopes
Indian share benchmarks posted their longest winning streak in nearly five months on Wednesday, on optimism over foreign fund inflows, while the focus was also on US midterm election results that are set to change the political landscape in the world’s largest economy. A Democratic win in US midterm elections is being seen as a scathing rebuke to President Donald Trump, whose administration’s…
Indian stock markets experienced their longest winning streak in nearly five months on Wednesday, buoyed by optimism surrounding foreign fund inflows. The positive sentiment was also tempered by the anticipation of the upcoming US midterm elections, which could drastically reshape the political landscape in the world's largest economy.
A Democratic victory in the elections is expected to be seen as a strong rebuke to President Donald Trump, whose administration's tariff policies and foreign interventions have adversely affected the Indian market this year.
The talks of a potential trade deal between India and the US acted as a catalyst for the Indian market's recovery. However, Trump's restrictions on Indian talent through curbs on H-1B and student visas added a degree of uncertainty. According to Nabil Milali, the portfolio manager at Edmond de Rothschild AM, the Democratic win does not necessarily guarantee the implementation of its agenda, as the US President retains a veto power which could block any legislation that he disagrees with.
The Nifty 50 closed the day at 23,960.6 - up 0.63%, while the BSE Sensex rose by 0.5% to 77,301.4. They have increased by approximately 5.6% over the past five trading sessions. Since the beginning of November, foreign investors have bought Indian shares worth $821 million, thereby reducing their net outflows this year to $30.59 billion.
All major sectors, excluding the IT sector, witnessed an upward trend. The Nifty IT index, however, declined by 1.5%, with Tata Consultancy Services and Infosys, the top two software exporters, plummeting by 2.5% and 1.7%, respectively.
Analysts have suggested that a possible consequence of the Democrats' win may be a slowdown in AI spending, a sector valued at $315 billion which has been disrupted by the rapid development of AI. This could potentially trigger a profit-taking trend among investors, who are expected to rotate their funds into other sectors reflecting signs of a broader recovery in Indian equities.
The trading caution in IT stocks could be attributed to the changing political scenario in the US, which is a major market for these companies. Brent crude futures dropped 1% to $102.5 per barrel as investors waited for the next move from Washington in the US-Israeli conflict in Iran.
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